Show-cause notice to 50 MFIs for failure to submit annual reports

The Microcredit Regulatory Authority (MRA) has issued show-cause notices to 50 microfinance institutions (MFIs) to explain why they failed to submit their annual financial reports for 2022-23.
MFIs were supposed to submit financial reports for 2022-23 by September 2023 -- three months after the financial year ends.
Initially, 102 of the total 750 non-governmental microfinance institutions failed to submit their annual audited financial reports for 2022-23 to the regulator until January. Subsequently, around 70 MFIs submitted reports, but 50 completely failed to do so.
"We issued show-cause notices, we will call them to the office and listen to them, if they finally fail, their licence will be cancelled permanently," Md Arifuzzaman, deputy director (Offsite Mentoring), told The Financial Express.
He said the MRA cannot simply cancel a licence. "We will follow certain processes before cancelling the licence," he said.
Earlier, both MFIs and the MRA blamed the high fees charged by chartered accountants, which are particularly burdensome for smaller NGO-MFIs.
These institutions also claim that CA firms are reluctant to audit smaller MFIs.
KAMM Raisul Islam, director of the On-site Supervision Department at the MRA, said the issue of high fees and the reluctance of CA firms has persisted for several years.
"Many MFIs cite high audit fees and a lack of available firms to audit the large number of MFIs," he said.
Mr Islam said the MRA will meet with the Institute of Chartered Accountants of Bangladesh (ICAB) to discuss the issue. They will request ICAB to consider offering different fee structures for smaller MFIs.
MFIs are obligated to file these mandatory reports within three months of the fiscal year's end, which is by the last day of September.
The MRA has cancelled the licences of several MFIs for failing to submit their audited reports in previous years.
Following unsuccessful attempts to communicate with these MFIs, the MRA launched investigations.
Murshed Alam Sarker, chairman of the Credit and Development Forum (CDF), previously said that exorbitant audit fees are a major obstacle for smaller NGO-MFIs in complying with mandatory audits.
He urged the ICAB to reduce fees for smaller organisations.
The MRA prioritises the eradication of poverty, protection of client interests and fostering sustainable development of the country by ensuring transparency in MFI operations and their accountability.
The number of micro-credit beneficiaries has risen in recent years mainly due to the government's policy support, according to a senior MRA executive.
MRA recently invited applications for providing new licences of MFIs following rising interest among new NGOs.
The NGOs that are registered under any of these laws - the Societies Registration Act, the Trust Act 1882, the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961, and the Company Act 1994 - can apply for the licence.
Currently, the registered MFIs are serving more than 40 million of the country's 170 million people.
The MRA is the central body to monitor and supervise microfinance operations in the country.
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