ABSTRACT
This chapter describes the array of informal financial arrangements found in Sri Lanka. Informal lenders in Sri Lanka are sources of finance for a wide range of activities from petty trading to financing large investments of unincorporated firms. The informal sector, by its very nature, eludes the collection of information on the nature of its activities. By 1969 the quantum of formal loans to the rural sector had increased substantially through various agricultural credit programs, and grew even more with the formation in 1981 of the People's Bank whose specific objective is to serve the credit needs of the rural sector. Voluntary groups are formed in Sri Lanka for specific needs such as meeting expenses for funerals as well as for other diverse purposes. Some nongovernment organizations borrow at market rates and lend at rates that give them a margin to cover risks and build up their own reserves.
