MRA plans to go tough on errant MFIs

The microcredit regulator is planning to go tough on the errant micro finance institutions (MFIs) to protect the interests of millions of clients.
The Microcredit Regulatory Authority (MRA) cancelled operations of some 10 microfinanciers in the last two months for violation of MRA rules and regulations, according to MRA sources.
"If any MFI violates rules or become non-functional, the regulator terminates registration of the respective NGO and issues them an official letter to pay back customers' money," said Manoj Kumar Biswas, a director of the MRA.
"MRA wants to ensure depositors safety. We never allow any NGO-MFI to cross lending of 80 per cent deposits," he said.
Currently, 732 MFIs are registered with MRA, serving around 40 million of the country's about 160 million people.
Mr Biswas said the regulator has taken many initiatives to strengthen the capacity with increased on-site and off-site supervision.  
A proposal to extend MRA activities across the country as well as setting up of offices is now lying with the concerned ministry for approval.
Currently, the MRA has 34 officials and staff under British Department for International Development (DFID)-funded project, most of them being experts recruited before government employment.
However, the government is yet to approve a full-pledged organogram for the MRA though seven years had passed since its establishment.
The regulator is now awarding new licenses to MFI for the regions where there is a small number or no NGO-MFI at all, to guarantee smooth distribution of microfinance.