The Central Bank of Sri Lanka has openly acknowledged that it lacks the legal authority to regulate online lending institutions that do not accept deposits a revelation that underscores a disturbing gap in oversight and leaves vulnerable citizens exposed to predatory practices. While this admission may be technically valid, it raises grave concerns about the institutional will to safeguard the public from financial exploitation in the digital era.
What is particularly alarming is not just the regulatory gap, but the institutional shrug that follows. If the country’s top financial regulator cannot intervene against blatantly abusive loan schemes, who will step in? The issue demands immediate answers and a sense of urgency that has so far been absent.
The contradiction is glaring. While the Central Bank strictly adheres to global directives such as sanctioning financial transactions involving Russian rubles under IMF mandates it appears incapable of reining in rogue digital lenders operating with impunity within Sri Lanka. This is more than a technical failure; it is a dereliction of duty. The nation’s monetary guardian is visibly absent at a time when intervention is most needed.
This crisis is not a theoretical debate about financial policy. It is a life-and-death matter for thousands of Sri Lankans lured into online loans with staggering interest rates ranging from 42% to 50% monthly. These schemes aren’t just usurious they’re financial traps. The people most affected are often already in distress, and these loans only tighten the noose. The Central Bank, for all its stated limitations, has yet to take meaningful steps to stem the tide.
The lenders, exploiting a legal gray zone, operate with near impunity. While they may not accept deposits and thus fall outside the Bank’s immediate jurisdiction, this loophole should not absolve the institution of responsibility. If the Central Bank’s core mandate is to protect the financial wellbeing of Sri Lankan citizens, it must act—regardless of technical limitations. The argument that these institutions “fall outside our scope” is no longer acceptable when lives are at stake.
Indeed, these digital lenders are not offering relief; they are perpetuating misery. Borrowers find themselves locked in cycles of escalating debt, often leading to bankruptcy, family breakdowns, and in some cases, suicide. The psychological burden is immense. Yet, the Central Bank remains disturbingly silent, making no substantial push for legislative reform or even widespread public education on the dangers of unregulated digital loans.
The broader failure here is one of leadership. Despite demonstrating its ability to comply with international mandates, the Central Bank has shown little urgency in addressing domestic financial exploitation. Its muted response signals a worrying prioritization of foreign compliance over local protection. If Sri Lanka is truly committed to consumer safety, its regulators must put citizens first, not global optics.
What’s particularly damning is that Sri Lanka is not alone in facing this issue but unlike other countries, it has been sluggish in its response. Nigeria, for instance, capped interest rates and enforced strict digital lending regulations, restoring transparency and consumer trust. Kenya required lenders to obtain licenses, introduced interest rate ceilings, and implemented a credit reference system. These governments recognized the danger and took decisive action. Sri Lanka, by contrast, has failed to follow suit.
The Central Bank’s inaction has left its people defenseless in a financial landscape overrun by predators. This is not just a missed opportunity it’s a profound failure. Sri Lanka has the tools and the authority to act, but not the political will. The moral obligation to protect vulnerable citizens from these exploitative schemes cannot be overstated. At this point, blaming legal boundaries is no longer credible. It is a refusal to lead.
The human cost is staggering. These are not just faceless statistics. Each story is a real tragedy: a family falling apart under the weight of unpaid debt, a worker harassed daily by loan recovery agents, a student unable to repay a loan taken in desperation. The cumulative toll on mental health, family stability, and societal trust is massive. And in the face of this, the Central Bank remains passive, failing to wield its influence to demand legal change or even name and shame the worst offenders.
Rather than pushing for reform, the Central Bank continues to pass the responsibility to legislators and claim its hands are tied. But if the institution genuinely wanted to act, it could spearhead legal amendments, coordinate investigations, and launch nationwide awareness campaigns. Its failure to do so reflects not just technical limits but a deeper disregard for public welfare.
At the same time, citizens must take some responsibility. Financial desperation can cloud judgment, but the public must be educated to spot the traps disguised as fast loans. The reality is harsh: these offers of easy money are often a gateway to long-term misery. Public literacy on the risks must rise, and people must think critically before accepting these “solutions.”
The question must now be asked: if the Central Bank can enforce complex sanctions on foreign actors, why is it so powerless at home? The answer, it appears, lies in a culture of bureaucratic detachment and a reluctance to disrupt the status quo. This must change. Institutional priorities need to shift toward people, not just protocol.
Ultimately, the road to reform requires a dual effort: a proactive Central Bank and an informed citizenry. These digital loans may seem harmless or helpful at first, but they represent a systemic threat to Sri Lanka’s economic health. The Central Bank must reclaim its role as the people’s financial guardian. If it fails to act now, the damage will only deepen—and the trust once placed in public institutions may never be restored.
