The Finance Houses Association of Sri Lanka (FHASL), the APEX body for Licenced Finance Companies in Sri Lanka recently signed a Memorandum of Understanding (MOU) with the Management Faculty of the University of Colombo for the later to conduct a sector study on the role of non-banking financial institutions (NBFIs) in Sri Lanka.
The study would cover the areas such as the total number and value of new advances granted by the NBFI players, the total number of customers served by the industry and the geographical distribution of customers, advances and deposits of the industry and the financial inclusion created by the NBFI sector.
Currently there are 45 registered Licensed Finance Companies in Sri Lanka, who are mainly engaged in SME finance, Microfinance and deposit mobilization.
The study is a recommendation of the Sector Stability Committee of the FHASL that has objectives such as to ensure the prevalence of a vibrant and a stable LFC sector (Licensed Finance Companies) playinga key role in serving the unbanked, to intervene in a proactive manner to information gathered through intelligence on member companies that are likely to make an adverse impact on the sector due to regulatory or other action, to react to information disseminated by electronic and print media on LFCs that are likely to trigger a wave of public reaction on the LFC sector and to enter in to a dialogue with LFCs that in the opinion of the committee is experiencing issues on stability and continuity in business to assist to overcome such issues wherever possible.
The study would reveal some valuable insights in to the role of NBFIs that have enabled the financial inclusion of low income entrepreneurs in Sri Lanka for the last 60 years and potential ways and means of how the sector could contribute to accelerating economic development outside the Western Province.