Around 300 non-governmental organisations (NGOs) who were primarily found eligible for getting licences by the microcredit regulator have failed to comply with pre-requisites including a deposit of Tk 1.0 million each on their respective bank accounts.
Some 405 out of 705 selected NGOs submitted relevant papers and deposited Tk 1.0 million in each of their accounts October last. The microcredit regulatory authority (MRA) under the ministry of finance is now scrutinizing their papers.
"This is the second step in licensing process…..after examining their papers, these 405 NGOs would be allowed to run microcredit operation. But they will have to wait for three more years to get final licence," Director-1 of MRA Abu Farad Mad Nasser told the FE.
Earlier, MRA extended the deadline twice after the expiry of first closing date for submission of applications on August 29 last year due to poor response.
"The final step of the licensing process is that these NGOs have to raise either Tk 5 million capitals or enlist 1000 members within 3 years," he said.
"Until Monday, 40 NGOs have got no-objection letter for running microcredit operation after assessing, their capabilities and they have already started operation," he added.
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.
According to 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.
"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 Farad Mad Nasser adding that still many NGOs failed to fulfil requirements.
Mr Nasser said those who will fulfil requirement of Tk 5 million or enlist 1000 members would be granted final licence anytime in 3 years.
"But after three years we will not extend deadline for giving final licence," he added.
The NGOs who are registered under any of the laws: Societies Registration Act, Trust Act 1882, Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961 and the Company Act 1994 are eligible to apply for licences. 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, 2012. Later, the regulator extended the time up to June, 2012 as it was expecting more applications. The extended deadline was November, 2012. By this time 1210 NGOs applied so far.
The MRA has specified 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-Miss in the country.
Currently, 731 microfinance institutions (Miss) are registered with the MRA. These registered Miss are serving around 40 million out of the country's 160 million people.
With a view to bringing the NGO-Miss 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.
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