RegAlert2019-03-06 | Direction No. 1 of 2019Added · Updated
Microfinance Act Directions No. 1 of 2019 on Deposits
The Central Bank of Sri Lanka issued Microfinance Act Directions No. 1 of 2019 to regulate deposit-taking activities by Licensed Microfinance Companies. The directive prohibits accepting deposits from minors and restricts acceptance solely to collateral deposits linked to lending facilities. Additionally, it mandates that total deposits must not exceed 60% of performing loans and bans incentive schemes for soliciting deposits.
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[LOGO]
MONETARY BOARD
CENTRAL BANK OF SRI LANKA
06 March, 2019 | MICROFINANCE ACT DIRECTIONS | NO. 1 OF 2019
DEPOSITS
Issued under Section 11 of the Microfinance Act, No. 6 of 2016.
| 1 | Repealing of Directions No. 3 of 2016 on Deposits | 1.1 | Microfinance Act Directions, No. 3 of 2016 on Deposits is hereby repealed |
| 2 | Restrictions on accepting time and savings deposits | 2.1 | Every Licensed Microfinance Company (LMFC) shall: |
| i. Accept deposits only as collateral deposits. | |||
| ii. Not accept any deposit from minors. | |||
| 3 | LMFCs to be a net lender and every customer to be a net borrower | 3.1 | LMFCs shall always be in the position of a net lender. The total deposits of a LMFC shall not be more than sixty percent (60%) of its total performing loans and advances. |
| 3.2 | If a customer of a LMFC has fully repaid a loan obtained from a LMFC, such LMFC shall not hold the collateral deposit for a period of more than six (6) months from the date the loan repayment was completed. | ||
| 4 | Prohibition of incentive schemes | 4.1 | No LMFC shall introduce any incentive scheme for soliciting deposits. |
| 5 | Interpretations | 5.1 | A Collateral Deposit means a savings deposit obtained as a collateral from a borrower against a lending facility granted to such borrower. |
| 5.2 | A minor means a person who has not attained the legal age of majority within the meaning of the Age of Majority Ordinance (Chapter 66) and any amendments thereto. | ||
| 5.3 | Incentive Scheme means an arrangement to confer a monetary or material benefit on the depositors other than by way of interest. |
[Signature]
Indrajit Coomaraswamy
Chairman of the Monetary Board
Governor of the Central Bank of Sri Lanka
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Source: Central Bank of Sri Lanka — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works