Bangladesh: MRA Set to Create Database to Bridge Gap of Information in MFIs

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Jul 2012
Bangladesh, July, 14 2012 - The microcredit regulator is set to create a database consisting of all the information related to country's microfinance institutions (MFIs).

Microcredit Regulatory Authority (MRA) has taken the initiative as Bank and Financial Institutions Division of Finance Ministry has recently asked the regulator to do the job. 

We are in talks with the Bangladesh University of Engineering and Technology (BUET) regarding the database and we have almost finalized the issue," Abu Farha Md. Nasser, Director-1 of MRA told the Financial Express Friday. 

He said it is final that BUET would set up the database which will bridge the gap of information in the sector.

Presently, some 643 MFIs are running microfinance activities across the country and more than 1,000 new micro lenders have sought permission to operate microfinance. 

Md. Nasser said all the information of licensed MFI-NGOs and Grameen Bank-- the country's largest and pioneer micro lender which is running under separate law-- would be stored at the database. 

"But I am not sure whether GB would provide information to the MRA as it is not running under MRA," he said adding: concerned ministry may interfere in the matter if it does not provide information. 

The MRA sources said the database project would cost around taka 25 million and it would take about six months to complete. 

Mr. Nasser said most of the information of MFI-NGOs would be open to the public. 

The information may include the total number of micro credit lenders and receivers, all the information of directors of MFI-NGOs, the amount of deposits, the disbursed amount of money, said MRA sources. 

Recently the government made an attempt to empower Microcredit Regulatory Authority (MRA) to appoint administrators or observers in the troubled microfinance institutions (MFIs). It has now no power to appoint an administrator or an observer in a troubled MFI.

During the first quarter of 2012 the MRA cancelled licences of 12 MFIs for deceiving people or failing to contribute to poverty alleviation or not working in accordance with the declarations made at the time of taking licence. 

Mr Nasser said the MRA would be stricter in future to bring order in the sector. 

The regulator has recently started to expand its watchful eyes at the divisional level.

According to MRA statistics, the sector has created direct job opportunities for over 110,000 people; 82 per cent of them are male and 18 per cent female.

Of the MFIs operating across the country only 5 are very large, 21 are large, 115 are medium, and 561 are small.

The country's first microfinance institution - Bangladesh Rural Advancement Committee (BRAC) - was established in 1972 through which microfinance activities had started in Bangladesh.

Nobel Peace Prize winner Grameen Bank also made available small loans to poor people of the country since its inception in 1983.

With a view to bringing the NGOs-MFIs under a regulatory framework, the government in July 2006 enacted "Microcredit Regulatory Authority Act (Act No. 32 of 2006) which became effective from August 27, 2006.

Under this Act, the government established the Microcredit Regulatory Authority (MRA) to ensure transparency and accountability of microcredit activities of the NGOs-MFIs in the country.

The Authority is empowered and responsible for implementing the law and bringing the microcredit sector of the country under a full-fledged regulatory framework.

 

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