The Microcredit Regulatory Authority (MRA) has decided to stop receiving fresh microcredit licence applications as the number of microfinance institutions (MFIs) has reached nearly 1,000.
"MRA has decided not to take any new application," said Mohammad Yakub Hossain, executive director (Licence, Policy and Law Department, and On-site Supervision Department) at MRA.
"However, we will examine the already submitted applications," he added.
Currently, there are 719 MFIs running microcredit operations with permanent licences, while 371 operate with primary licences.
The government awarded conditional licences to the 371 non-governmental organisations (NGOs) to run microcredit operations across the country in the last three years.
Governor of the Bangladesh Bank Ahsan H Mansur at a recent meeting questioned whether MRA is capable of regulating such a large number of MFIs.
The new MFIs have been operating with conditional licences for three years to demonstrate their capabilities, according to MRA.
To get a final licence, they must reach specific targets, including a minimum of 300 small clients with Tk 4.0 million in outstanding loans in the first year, a minimum of 600 clients with Tk 7.0 million in loans in the second year, and a minimum of 1,000 clients with Tk 10 million in loans by the third year.
Each of the NGOs that got the conditional licence deposited Tk 3.0 million in a designated bank account to start operations. The funds are being used to provide small loans, subject to MRA approval.
In February 2021, the microcredit regulator invited applications due to the growing interest among new NGOs in seeking licences to provide small loans to marginalised individuals.
The initiative aligned with the government's efforts to promote self-reliance through vocational training.
The NGOs registered under any of these laws - the Societies Registration Act, the Trust Act 1882, the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961, and the Company Act 1994 - were eligible to apply for licences.
Besides, the NGOs engaged in various development activities, excluding microcredit operations, also met the requirements for obtaining licences.
Over 1,130 NGOs applied for licences to run microcredit schemes across the country, and all of them may be granted conditional approval.
The government has decided to award three-year conditional licences to all new MFI applicants, subject to meeting application requirements, according to sources.
MRA Director (Admin and Human Resources Department) Zillur Rahman previously said evaluating all applications could take around three years.
"We lack manpower. So a thorough evaluation of all applications will be time-consuming. It may take three years," he told The Financial Express.
The Microcredit Regulatory Authority Act 2006 was enacted in July 2006 to establish a regulatory framework for NGO-MFIs. The act came into effect on August 27 that year.
MRA subsequently launched the first round of applications for microcredit operations, primarily to regularise the existing operators.
"We received 4,300 applications in 2006-07, but only 758 NGOs were deemed competent for microcredit operations," Yakub Hossain told The Financial Express.
In the second phase, MRA invited applications from 37 poverty-stricken districts and received 1,212 submissions.
The regulator designated these areas to prevent overlap in small lending and borrowing services and support the government's poverty alleviation programmes.
After three years of observation, MRA in 2014 awarded 122 licences.
However, the regulator revoked the licences of 151 NGO-MFIs at different stages due to compliance-related shortcomings. Currently, around 750 NGO-MFIs are operating under the regulator.
The registered MFIs serve over 40 million people.
bdsmile@gmail.com
© 2025 - All Rights with The Financial Express
