The regulator has asked the Micro Finance Institutions (MFIs) to obtain its prior permission for procuring fixed assets through spending money from their accumulated surplus, sources said
The Microcredit Regulatory Authority (MRA) imposed the restriction against the backdrop of alleged violation of a spending limit from the surplus fund by many of the MFIs.
The regulator issued a circular in this regard recently, asking the MFIs to strictly follow the directives.
Currently, the MFIs can use maximum 35 per cent from their accumulated surplus for purchasing the assets.
A good number of MFIs have been purchasing fixed assets by breaching existing rules of the regulator, a senior official at the MRA said.
The official declined to provide the number of MFIs which are violating the regulatory rule, but said many of the MFIs were breaching the limit and purchasing 'unnecessary' assets - not essential for operations of the MFIs.
He, however, said that this practice is restricted for sustainable development of the country's MFIs.
From now on, the MFIs will have to obtain permission from the MRA, in addition to approval by their respective board of directors, to purchase permanent assets.
When asked, MRA Executive Vice-Chairman Amalendu Mukherjee said: "We have taken the move so that the lending operations of the MFIs are not hampered due to purchase of unnecessary assets."
The MRA wants more lending to clients by the country's MFIs, he added.
As of July 01 this year, some 705 MFIs have been registered with the MRA and 128 are operating on a temporary basis as on May 27 this year.
Credit disbursement by the registered MFIs stood at Tk 787.67 billion at the end of June 2016, with a growth of 24 per cent over the previous year.
The number of microcredit clients stood at 27.58 million in 2016, according to the latest annual report of the MRA.
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