MRA to assess input of microcredit to GDP

The Microcredit Regulatory Authority (MRA) is planning to assess the contribution of microcredit to the gross domestic product (GDP), as the regulator thinks that there is no authentic and in-depth research about the microfinance input to the economy.

The 37th meeting of the microcredit regulator has decided to carry out the research under a reputed research organisation. The meeting was held on June 24, presided over by MRA board chairman Dr. Atiur Rahman.

"Besides uplifting the condition of poverty-stricken people, microcredit has multifarious use in the country, now it needs to know how much microcredit is contributing to the economy," according to the minutes of the board meeting.

The board thinks that if the study titled 'Contribution of Microfinance to the GDP and Economy of Bangladesh' is done, MRA will be sure about taking decisions on the microcredit sector.

According to MRA sources, the regulator has primarily contacted the Bangladesh Institute of Development Studies (BIDS) for conducting the research. BIDS has also showed interest about it and submitted a concept paper to MRA.

"Currently it is said that microcredit is contributing 2.5 per cent to the country's GDP, but we think the figure is not correct," MRA director Sazzad Hossain told The Financial Express.

He said microcredit has expanded a lot over the years after the formation of MRA, but there was no in-depth research on the contribution.

"The study result will help MRA to make plans and take policy decisions," he said.

MRA was established in 2006 to ensure transparency and accountability of microfinance institutions (MFIs) in the country. It is the central body to monitor and supervise operation of the MFIs.

Currently, 745 MFIs are registered with MRA. These registered NGOs are serving more than 40 million people out of the country's 160 million people. Currently, MFIs under MRA has Tk 300 million outstanding loans. The number of total clients of this sector is 35 million. MRA is now in a process of granting licenses to 350-400 more MFIs.

The then government in July 2006 enacted the Microcredit Regulatory Authority Act, 2006 (Act No. 32 of 2006) to bring the MFIs under a regulatory framework, which became effective from August 27, 2006.