50 micro-lenders lose licences

The licences of nearly 50 microfinance institutions (MFIs) have been cancelled by the regulator for breach of the set rules and regulations guiding micro-credit operations, officials said.
Director of the Micro Credit Regulatory Authority (MRA) Md. Shazzad Hossain told the FE Tuesday that the regulator punished the MFIs by cancelling their licences for not complying with the existing directives in running their operations.
"We had reminded them to follow the directives of the MRA repeatedly, but they did not pay attention to our direction. Ultimately, the country's central body of the NGO-MFIs has rejected their licences," he said.
The director, however, hastened to add that MRA's main priority agendas are eradication of poverty as well as its clients' interest and fostering sustainable development of the country by ensuring transparency and accountability of microfinance operations of NGO-MFIs.
So, the regulator was mainly taking decision to cancel their licences for the sake of clients' interest.
"Many MFIs were not capable of running their operations for fund shortages. But it was a simple math: funds were available to run any MFI if its entrepreneur was honest and capable" said an official of the regulator, who is close to the matter.
The MRA scrapped the licences most of them misused funds through breach of rules, he said.
The MRA had terminated registration of 46 MFIs until July 8, 2014. Some are in the pipeline to lose their licences, according MRA data.
The microfinance regulator is taking initiative gradually to spread out its operations further across the country in order to strengthen on-sight and off-sight supervision over the MFIs, sources said.
According to the latest moves, meanwhile, the MRA has decided to take action against micro-finance intuitions if they violate the interest rates on lending and savings, as set by the regulator, they said.
Besides, the micro-credit regulator imposed cap on inter-MFI transactions. No MFIs can charge more than 10 per cent as interest during inter-MFI transactions, they pointed out.
It has become difficult to regulate and supervise the activities of the MFI-NGOs by Dhaka-centric regulator with their very little manpower and infrastructures as services of MFIs are laid across the country, the sources said.
  Currently, 696 MFIs are registered and 92 have got licences temporally from the Authority. These registered NGOs are serving more than 40 million people out of the country's 160 million people.