MRA to review microcredit rates

The microcredit regulator is set to review the interest rates of microfinance institutions (MFIs) to make the service charge time befitting, officials said.
"We have already formed a high-powered committee to suggest a reasonable level of the rate. The committee will sit soon," deputy director of Microcredit Regulatory Authority (MRA) Mohammad Yakub Hossain told the FE Sunday.
He said the MRA would take the next steps based on the recommendations by the committee, headed by Palli Karma-Sahayak Foundation (PKSF) chairman Dr. Qazi Kholiquzzaman Ahmad.
Another senior official at the MRA argued that the service charge or interest rates of the MFIs should be made time befitting by reducing it to a practical level commensurate with the lending rates in the financial sector that went down across the board.
A good number of small MFIs were charging over 27 per cent in interest or service charge on their disbursing loans while the large ones were charging 25 per cent, said an official concerned.
According to a circular, the MRA had initially set the maximum interest rate at 27 per cent per annum while asking the MFIs to gradually bring the rate down with operational efficiency.
A high official, requesting anonymity, said the service charge should be brought down to below 20 per cent irrespective of the types of loans if the MFIs really want to benefit the poor and help achieve the sustainable development goals.
Currently, 692 MFIs are registered and 177 have got licences temporarily from the authority. These registered NGOs are serving more than 40 million out of the country's 160 million people.
The MRA's main priority agendas are eradication of poverty as well as protecting its clients' interest through ensuring transparency and accountability of microfinance operations by NGOs and MFIs. The clients of MFIs are mainly low-income people.
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