Fitch ratings agency warns that the increased exposure to microfinance at Sri Lankan non-bank financial institutions (NBFIs) could pose a risk to their credit profiles; exposure has risen from 4% in December 2015 to 27% in March 2014. Fitch is concerned that lending to this segment is more susceptible to asset-quality deterioration during periods of economic stress. Furthermore, Sri Lanka lacks a comprehensive regulatory and supervisory system for the microfinance sector, meaning that many of the large number of companies engaged in the provision of micro-finance are unregulated.
Fitch ratings agency warns that the increased exposure to microfinance at Sri Lankan non-bank financial institutions (NBFIs) could pose a risk to their credit profiles; exposure has risen from 4% in March 2014 to 27% in December 2015. Fitch is concerned that lending to this segment is more susceptible to asset-quality deterioration during periods of economic stress. Furthermore, Sri Lanka lacks a comprehensive regulatory and supervisory system for the microfinance sector, meaning that many of the large number of companies engaged in the provision of micro-finance are unregulated.