Move to set up microfinance credit information bureau

A project taken up for establishing microfinance credit information bureau (MF-CIB) for the microfinance regulator is expected to be launched in June, an official said.

To this effect, a memorandum of understanding (MoU) may be signed between Economic Relations Division (ERD) and UK's Department for International Development (DFID) next month, he said.

"The process of setting up the MF-CIB has already been formalised. Necessary steps are being taken in this regard," Amalendu Mukherjee, executive vice-chairman of Microcredit Regulatory Authority (MRA), told the FE.

Bangladesh Bank (BB) is developing software for the programme, he said.

Sources said the MRA is working on a plan to set up the MF-CIB for nearly 26 million members of the country's microfinance institutions (MFIs). DFID will finance the project.

It would work to contain overlapping loans, absorb shocks and halt the dropout rate of borrowers concerned, the sources said while elaborating on the unit's functions. The board of the microfinance regulator has already approved introduction of the MF-CIB.

"Bangladesh is eager to implement the project titled 'Establishment of MF-CIB for the MRA' under Financial Institutions Division (FID) under the Ministry of Finance," a previous letter said.

"Under the project, the MF-CIB will create a sound credit culture and good payment behaviour which will lead a better access of financing from MFIs and microfinance providers. It will provide reliable credit report of financial institutions," the letter also mentioned.

It will help achieve economic growth and improve the living standards of the poor people through increased incomes, it said.

The CIB will help reduce the transaction cost for both borrowers and lenders as well as bring down the demand for funds, a senior official of the MRA said.

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