MFIs asked to stop running liaison offices with microfinance money

Microcredit regulator has restricted use of fund for running liaison offices of the microfinance institutions (MFIs), officials said.  
In an official circular issued last week, the Microcredit Regulatory Authority (MRA) has also asked chief executive officers (CEOs) of the MFIs to discharge their functions from their respective headquarters.
MFIs carrying out activities other than microcredit operation have come under scrutiny as they have been asked by the MRA not to use their small loans for operating their liaison offices, an official of the MRA said.
"The MRA's move came after an investigation found that some MFIs spent microcredit fund unnecessarily in the name of running link offices, which is against the existing rules and regulations of MRA," a senior MRA official told the FE Monday.
He said many CEOs stay at their liaison offices located in the capital or adjoining areas outside the head office. Operational expenses of the link offices are being borne by the respective microfinance intuitions, he said.
But he did not disclose the number of MFIs who have been violating the MRA regulations.
M Mosharrof Hossain, finance director at BURO Bangladesh, said he supports the 'spirit' of the regulator.
"This is natural a CEO will stay at the head office. Many CEOs run offices like residence-cum-offices. It doesn't look good," he said. "This practice should be stopped."
"Every microcredit organisation will have a Chief Executive Officer (CEO), who will be the full-time prime executive officer of the organization," says the MRA Rules-2010, 9 (1).
Liaison offices are mostly set up in the capital city to facilitate communication with the MRA, donor and funding agencies and different local and foreign organisations.
The MFIs, which have liaison offices, are 'unnecessarily  spending' from their microcredit funds in the name of running offices, which is not the right thing to do, the circular added.  
Besides, the CEOs of all the MFIs have strictly been directed to follow the existing regulations in this regard, the circular mentioned.
Director of the MRA, who signed the circular, could not be contacted, despite several attempts over phone on Monday.
At present, the sector has 20 million borrowers and 26 million members and its total outstanding loan is now Tk 350 billion.
Presently, some 693 MFIs are registered with the MRA for running microcredit programme.
    [email protected]