Accepting term deposits by MFIs restricted
Wednesday, 3 October 2007
FE Report
The Microcredit Regulatory Authority (MRA) has decided to restrict accepting term deposits by the micro-finance institutions (MFIs) from their respective members to avoid financial risks, official sources said.
The decision was taken at a board meeting of the MRA Tuesday held at the central bank with its Chairman and the Bangladesh Bank (BB) Governor Salehuddin Ahmed in the chair.
"We have decided to impose restrictions on accepting term deposits by the MFIs to encourage the non-governmental organisations (NGOs) provide social services rather than concentrate on businesses," a MRA senior official told the FE Tuesday after the meeting.
He also said the MFIs should no longer accept saving deposits in excess of the weekly mandatory and voluntary amounts from their members.
"Only banks and non-banking financial institutions are allowed to receive term deposits from public in line with the existing rules and regulations," the official noted.
The MRA also decided to issue licences to additional 190 MFIs within the next week to comply with the existing micro-credit regulatory act.
The country's micro-credit watchdog has already issued 62 licences to the MFIs across the country for ensuring their transparency and accountability.
Every MFI must obtain a licence as a pre-requisite under the micro-credit regulatory act to operate in the country, he said, adding that the latest restrictions are aimed to help the MFIs meet the criteria for qualifying for licences.
The concerned authorities earlier set the criteria requiring an MFI to have minimum 1000 borrowers with Tk 4.0 million in credits as pre-requisite to obtain the licence.
The MRA has primarily selected 700 applications from around 4000 that were submitted to its office seeking licences.
The MRA officials have already completed field inspections of at least 200 applicants to verify the information about the sources of funds, ownership and governance position, provided by the MFIs in their application.
The MRA has already decided to allow the MFIs, which could not yet meet the criteria, set by the authority, to function until June 30, 2009.
The government earlier formed an eight-member Micro-credit Regulatory Authority, headed by the BB governor, to issue licences for all private micro-finance institutions in the country.
The act was passed in parliament in early 2006 to bring all operating micro-finance institutions under a regulatory body for ensuring their transparency and accountability.
The Microcredit Regulatory Authority (MRA) has decided to restrict accepting term deposits by the micro-finance institutions (MFIs) from their respective members to avoid financial risks, official sources said.
The decision was taken at a board meeting of the MRA Tuesday held at the central bank with its Chairman and the Bangladesh Bank (BB) Governor Salehuddin Ahmed in the chair.
"We have decided to impose restrictions on accepting term deposits by the MFIs to encourage the non-governmental organisations (NGOs) provide social services rather than concentrate on businesses," a MRA senior official told the FE Tuesday after the meeting.
He also said the MFIs should no longer accept saving deposits in excess of the weekly mandatory and voluntary amounts from their members.
"Only banks and non-banking financial institutions are allowed to receive term deposits from public in line with the existing rules and regulations," the official noted.
The MRA also decided to issue licences to additional 190 MFIs within the next week to comply with the existing micro-credit regulatory act.
The country's micro-credit watchdog has already issued 62 licences to the MFIs across the country for ensuring their transparency and accountability.
Every MFI must obtain a licence as a pre-requisite under the micro-credit regulatory act to operate in the country, he said, adding that the latest restrictions are aimed to help the MFIs meet the criteria for qualifying for licences.
The concerned authorities earlier set the criteria requiring an MFI to have minimum 1000 borrowers with Tk 4.0 million in credits as pre-requisite to obtain the licence.
The MRA has primarily selected 700 applications from around 4000 that were submitted to its office seeking licences.
The MRA officials have already completed field inspections of at least 200 applicants to verify the information about the sources of funds, ownership and governance position, provided by the MFIs in their application.
The MRA has already decided to allow the MFIs, which could not yet meet the criteria, set by the authority, to function until June 30, 2009.
The government earlier formed an eight-member Micro-credit Regulatory Authority, headed by the BB governor, to issue licences for all private micro-finance institutions in the country.
The act was passed in parliament in early 2006 to bring all operating micro-finance institutions under a regulatory body for ensuring their transparency and accountability.