Most of the Micro Finance Institutions (MFIs) are not complying with the required reserve fund provision of the Microcredit Regulatory Authority (MRA), officials said.
As of December, 2013, some 89 out of 645 MFIs are following the MRA Rules-2010, but the rest of the MFIs are defying the regulator's mandatory rules to preserve their required 10 per cent reserve funds, according to the MRA data.
Section 20(1) of the MRA Rules-2010 says, "Every microcredit organisation will create a reserve fund using 10 per cent of its total income surplus."
"The reserve fund will be maintained in a bank account of a specified scheduled bank under the supervision of the head office of the relevant microcredit organisation," according to the section 20(3) of the Rules.
Director of the MRA Md Shazzad Hossain told the FE Friday: "The regulator introduced the Rules to ensure sustainability of the country's NGO-MFI sector in 2010. So, it may take time to comply with some areas including reserve fund. Meanwhile, most of MFIs have started to maintain the required reserve fund provision."
The situation has been changing. In 2012, only 4.34 per cent out of 645 MFIs fulfilled the required reserve fund as per MRA Rules and nearly 14 per cent MFIs preserved 10 per cent reserve fund accordingly in 2013, he said.
"We hope all the NGO-MFIs under the MRA will be able to protect 10 per cent required reserve fund by June, 2015," he said.
It is mandatory for the MFIs to comply and maintain with the Act and Rules of the MRA. The MFIs failing to follow the rules would be penalised, he added.
The MRA will take action against the MFIs that will not be able to fulfil the reserve fund requirement in the second half of 2015, sources said.
A top official of an NGO-MFI said, "We all were going to maintain the required reserve fund provision of the MRA, even though it has been late."
"We strongly believe that all the NGO-MFIs will overcome the drawback within one and a half years," he said.
Most of the MFIs are not complying with the MRA Rules relating to the reserve fund properly and they have to face stringent punishment as per rules in the next year, the officials of the department concerned of the MRA told the FE.
Section 37(1) of the MRA Act of 2006 says, "If any person violates this act or any rule framed under its purview or commit any offence under this act or in cases where administrative fine can be imposed, the authority in all those matters, instead of filing criminal cases, may impose fines up to an amount of Tk 0.5 million, considering the extent of the violation of the Act or the offence committed."
Currently, 696 MFIs are registered and 92 have got licences temporarily from the authority. These registered NGOs are serving more than 40 million out of the country's 160 million people, according to latest data of the MRA.
500-plus MFIs breach regulator\\\'s rules
Rezaul Karim | Published: July 27, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
Share if you like