Tk 2.0b refinancing fund guidelines soon for Tk 10 account-holders

The Microcredit Regulatory Authority (MRA) is formulating guidelines for a refinancing fund of Tk 2 billion for Tk 10 account-holders.

The Bangladesh Bank (BB) board has recently decided to create a refinance fund of Tk 2 billion for making Tk 10 accounts active, especially those of marginal and landless farmers who do not have enough savings to keep their accounts moving.

The marginal and landless farmers, small shop owners, hawkers and people affected by river erosion having Tk 10 accounts will get loans under the refinance scheme with 6.5 per cent interest rate.

The central bank has decided to disburse 75 per cent of the loan through the registered microfinance institutions (MFI) under the MRA.

"We are formulating the guidelines for the loans and these would be completed by next week," a MRA Director told The FE, preferring not to be named.

"This is an initiative of financial inclusion policy of the Bangladesh Bank," he said.  

A BB official said that the central bank would disburse the revolving fund to the banks which are assigned to open the accounts and they would give the fund to the MFIs.

The banks including the Sonali Bank, the Janata Bank, the Agrani Bank, the Rupali Bank, the Bangladesh Krishi Bank, the Rajshahi Krishi Unnayan Bank and the BASIC Bank opened around 1.3 million accounts with initial deposit of Tk 10.

The BB, however, will provide subsidy at three and a half per cent interest rate to the banks. The rest 6 per cent would be paid by the clients.

The banks will be able to claim the subsidy when they will recover their loans from the account holders under the refinance fund.

MRA sources said, the fund would be refinanced to the clients after one month.

Currently, 725 MFIs are registered with the MRA. These MFIs are serving around 40 million out of the country's 160 million people.

The MRA is the central body to monitor and supervise microfinance operations of NGO-MFIs in the country.

With a view to bringing the NGO-MFIs under a regulatory framework, the then government in July 2006 enacted the Microcredit Regulatory Authority Act, 2006 (Act No. 32 of 2006), which became effective from August 27, 2006.