NGOs averse to get microcredit licences

Ismail Hossain The non-government organisations (NGOs) that are eager to operate microcredit in the country are reluctant in getting licences for running their operation. Less than half of the selected NGOs submitted their documents and deposited cash Tk 1.0 million in their each accounts until Wednesday even after extension of deadline for the second time. Only 350 have responded so far among 705 selected NGOs, said sources on Wednesday. The microcredit regulator has extended the deadline for the second time for two months after the expiry of deadline on August 29 due to poor response enabling the NGOs to submit the required documents and depositing the money. "We did not want to extend the deadline as the requirements for licences are very nominal…but we have extended the same for the second time but this time the response is also very poor," Director-1 of Microcredit Regulatory Authority (MRA) Abu Farah Md Nasser told the FE. The regulator earlier made 'primary selection' of 705 NGOs for running microcredit operation in 37 poverty-stricken districts of the country. The MRA sent letters to the selected NGOs two months back informing them about their selection from among 1,210 applicants. It has also allowed them three months' time to prepare themselves for the final selection. "Earlier we have decided to fix Tk 2.0 million as deposit money, but later we cut it down to Tk 1.0 million so that the interested NGOs can work for the poor people," said Abu Farah Md Nasser. He said this large gap from 1,210 to 705 is not expected. He thinks these MFIs are not capable of working with the poor in the remote areas. Mr Nasser expressed the hope that all the selected NGO-MFIs would submit their documents and deposit the required cash before the deadline ends. According to given conditions, the primarily selected NGOs need to set up offices, appoint a certain number of staffs, and deposit Tk 1.0 million each in their own bank accounts for getting licences within the next three months. The NGOs need to be registered under any of the laws: the Societies Registration Act, the Trust Act 1882, the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961 and the Company Act 1994. The NGOs which are now engaged in various development activities, except microcredit, will qualify for obtaining licences. The MRA invited applications from interested organisations on November 16, 2011. The deadline for submitting applications was April 1 of the next year. Later, the regulator extended the time to June, 2012 as it was expecting more applications. The further-extended deadline was November, 2012. The MRA has marked out the areas this time to avoid overlapping of small lending/borrowing services and also to help meeting the government's goals of poverty reduction programmes. The MRA is the central body to monitor and supervise microfinance operations of NGO-MFIs in the country. Currently, 725 MFIs are registered with the MRA. These registered MFIs are serving around 40 million out of the country's 160 million people. With a view to bringing the NGO-MFIs under a regulatory framework, the then government in July 2006 enacted the Microcredit Regulatory Authority Act, 2006 (Act No. 32 of 2006), which became effective from August 27, 2006.