Microfinance rules tightened for non-government organisations

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Oct 2006
Dhaka, Bangladesh , October, 03 2006 - Bangladesh is tightening its supervision of non-government organisations (NGOs) that offer micro credit finance, aiming to monitor the flow of cash more closely, a senior central bank official said yesterday.

There are more than 2000 NGOs in Bangladesh and most of them are involved in micro credit financing. But the government really had no means of keeping a track of the ultimate use of the money, officials said.

Under new rules issued by Bangladesh Bank, the central bank, the "NGOs have to obtain a licence from the Microcredit Regulatory Authority (MRA) within six months to continue offering small credit to borrowers," Mohammad Asaduzzaman, a joint director, said. "This is mandatory."

Currently, NGOs don't have to apply for a licence dealing specifically with microfinance. Instead, they have to apply for a general licence covering their broad range of activities.

The eight-member MRA, headed by central bank governor Salehuddin Ahmad, started functioning on Sunday, Asaduzzaman said.

"The government has formed the authority to ensure security of savings of the depositors and accountability of the customers of microfinance institutions," he said.



 

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