The Microfinance Act, No. 6 of 2016 was enacted with the objective of providing a regulatory framework to cover microfinance institutions that are not regulated at present. The purpose of the Act is to improve the delivery of financial services to low income persons and micro enterprises, increase financial inclusion, strengthen the soundness and systems of microfinance institutions, facilitate microfinance institutions to access wider sources of funding, promote consumer protection and promote a safe and stable financial system.

The Microfinance Act came in to operation on 15 July 2016. Accordingly, the Monetary Board of the Central Bank of Sri Lanka is empowered to issue licences for applicant  companies carrying on microfinance business, issue rules and directions for Licensed Microfinance Companies (LMFCs) and issue guidelines to the Registrar of Voluntary Social Services Organisations for the regulation and supervision of Microfinance Non-Governmental Organizations (MNGOs).

The first review of the three-year Extended Fund Facility (EFF) obtained by Sri Lanka has been successfully completed by the International Monetary Fund (IMF) and the second tranche to the value of SDR 119.894 million (approximately US dollars 162.6 million) has been disbursed on 18 November 2016.

The EFF aims at supporting the balance of payments and the broad economic reform agenda of the government. The IMF mission, that visited Sri Lanka in September, particularly welcomed the fiscal consolidation measures implemented by the Government and tightening of monetary policy, which has contributed to improved market confidence and an easing of pressures on the external sector. The mission appreciated the efforts of the government and other institutions in achieving all quantitative performance criteria through end-June. The members of the IMF Executive Board also have expressed their satisfaction on the achievements of Sri Lanka under the ongoing EFF programme.