140 MFIs lose licences in 11 years, mostly for misuse of funds

REZAUL KARIM
Some 140 microfinance institutions (MFIs) have had their licences revoked by the regulatory authority in the last eleven years till 2022, mostly for misusing funds.
"We repeatedly warned microlenders to comply with regulations, but they failed to heed our guidance," a Microcredit Regulatory Authority (MRA) director told The Financial Express. "Consequently, we were forced to revoke their licences."
As of November 2023, some 727 MFIs -- dedicated to alleviating poverty and fostering sustainable development -- were certified by the MRA. Besides, 358 hold temporary licences.
According to the MRA, transparency and accountability throughout their poverty eradication journey are paramount for microlenders.
However, the MRA director said that the revoked licences mainly emerged from a failure to ensure proper fund management.
Separately, an MRA source said that several MFIs suffered from declining operational health and mismanagement, eventually leading them to voluntarily surrender their licences.
Besides, high operating costs exceeding income undermined the sustainability of many MFIs, forcing them to cease operations, according to the MRA source.
Despite these challenges, loan disbursement data paints a subtle picture of growth in the sector.
Registered MFIs disbursed significantly more loans, with the figure rising from Tk 1,512.09 billion in June 2021 to Tk 1,918.83 billion by June 2022.
The number of loan recipients and MFI members also saw increases, reaching 29.74 million and 38.26 million, respectively, compared to 27.80 million and 35.19 million a year prior.
The MFI branch network also expanded, growing from 20,955 to 23,543 in the same period, while employee numbers jumped from 0.176 million to 0.207 million.
For the rise in micro-credit beneficiaries, a senior MRA executive credited the government's supportive policies for the sector.
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