INAFI Bangladesh Meets Bangladesh Bank Governor to Discuss Key Microfinance Sector Issues

8 May 2025

INAFI Bangladesh Meets Bangladesh Bank Governor to Discuss Key Microfinance Sector Issues

On 8 May 2025, the Board and Advisory Council Members of INAFI Bangladesh representing NGO-MFIs (Microfinance Institutions) made a courtesy visit with honorable Governor of Bangladesh Bank, Dr. Ahsan H. Mansur at his office. The meeting focused on several important issues concerning the microfinance sector. The key points discussed are outlined below:

1. Deposit Protection Scheme:

We clarified that the Deposit Protection Scheme, as mentioned in the MRA Act, 2006, is not necessary for MFIs. This provision is more relevant for the banking sector. Unlike banks, MFIs do not accept public deposits; their clients are both depositors and borrowers. In contrast, bank depositors are generally not loan recipients. Furthermore, data analysis shows that MFI client deposits are 121% protected, making any additional protection redundant.

2. Savings Collection Conditions:

According to the MRA Rules, 2010, MFIs may collect savings amounting to 40–50% of their capital. This condition creates operational challenges for both MFIs and their clients.

3. Annual Subscription Fee:

The current requirement of paying 0.15% of gross interest/service charges as an annual subscription is burdensome for MFIs.

4. Special Fund Allocation at Bangladesh Bank:

We proposed that Bangladesh Bank establish a special fund of at least Tk 10,000 crore to support small and medium-sized MFIs facing a shortage of loanable funds.

5. Foreign Fund Mobilization:

We recommended easing the conditions set by Bangladesh Bank to facilitate the mobilization of foreign funds by MFIs.

6. 100% Reporting of Agricultural Loans:

We shared the practical challenges MFIs face in complying with the 100% reporting requirement for agricultural loans.

7. Thumb Impression for Bank Borrowing:

We discussed the requirement of thumb impressions for borrowing from banks and explained why it is impractical for MFIs to comply.

8. NOC Requirement for Bank Borrowing:

We thoroughly discussed the challenges MFIs face in obtaining a No Objection Certificate (NOC) for bank borrowing.

9. Representative on the MRA Board:

We strongly emphasize the inclusion of representatives from MFIs on the MRA Board. Their presence will foster better partnership and deeper mutual understanding between MRA and the MFIs.

In addition to this, several other issues were raised and a memorandum along with relevant documents was submitted to the Honorable Governor. He attentively listened to the issues raised and assured the members that appropriate steps will be taken to address the concerns raised.