MRA holds back MFIs from going digital!
Ismail Hossain | Saturday, 1 February 2020
Microfinance institutions (MFIs) have been asked to maintain hard copy of their general ledger to keep financial records as the entire financial sector is going digital and paperless.
The Microcredit Regulatory Authority (MRA) in a recent circular directed the MFIs to preserve a general ledger and hard copy of cash book alongside digital records.
It said MRA inspectors find scrutinising digital records difficult as many MFIs made their financial records digital and do not keep a hard copy.
According to the microcredit regulatory rules, keeping a hard copy of cash book and ledger is mandatory.
However, the MFIs said the regulator is going one step back as they are moving further ahead keeping pace with the world.
The MRA should update their laws, rules and regulations instead of issuing such directives, they cited.
Credit and Development Forum executive director Abdul Awal said it is unfortunate that the MRA has asked to keep analog ledger and hard copy of cash book.
He said most of the MFIs have already gone digital. "Many don't preserve hard copy of cash book and ledger."
MRA director Mohamamd Yakub Hossain said the directive is in line with the Microcredit Regulatory Authority Rules-2010.
The law stipulates that the MFIs must preserve a ledger and hard copy of cash book.
"Besides, it is easier to inspect in ledgers than those in the digital form of records," Mr Hossain mentioned.
According to rules 36(2) and 42 of the watchdog, every microcredit entity must update and maintain the current registers and preserve general ledger and cash book.
Mosharrof Hossain, director of BURO Bangladesh, one of the top ten NGO-MFIs, said they do not maintain analog ledger and cash book anymore.
This is absurd that the regulator is asking to preserve hard copy of ledger and cash book while operations in most of the MFIs are already digital, he added.
"The MRA should change laws and update along with the global change instead of holding us back," he observed.
There are an estimated 4.0 million members in around 700 NGO-MFIs and different banks and non-bank institutions, according to the MRA annual report 2018.
The industry's outstanding loan now stands at a staggering Tk 1,494 billion.