WB to help prepare codes for microfinance sector

Rezaul Karim | Published: May 17, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

An extensive code of conduct (CoC) is in the pipeline for over 25.11 million clients of the microfinance institutions (MFIs) with an aim to make them more aware, responsible and ethical, officials said.
Recently, the World Bank (WB) has proposed to finance US$0.5 million for preparing the project. Implementation period of the project will be two years.
The Microcredit Regulatory Authority (MRA) has agreed to the proposal of the international lender. The MRA has sent the WB proposal to the ministry of finance seeking its approval. Â
The CoC will act as a guideline for the regulator. Preparing a CoC for the country's MFI clients is urgently needed to keep adjustments with the existing act and regulations.
There is no overall code of conduct for the MFI clients although some related sections have been put separately in the existing MRA act and regulations.
Acceptability and scoring of the regulator will be enhanced in the international arena. It will be possible to collect necessary documents in this connection shortly if the guideline is implemented.
Besides, it will be helpful to protect the interest of all clients of the country's MFIs.
Presently, some MFIs often are not complying with the MRA's existing rules and regulations. There are allegations against a significant number of MFI officials that they do not know how to behave with their clients, sources concerned said.
On the contrary, some clients don't behave well with the officials concerned of the MFIs. As a result, the proposed CoC must be adopted immediately for the sake of the clients and MFIs.
"We have got a proposal from the WB for preparing the CoC. The proposal has been sent to the ministry concerned for approval," Director of the MRA Md Shazzad Hossoin told the FE.
Behaviours and rights of the MFI clients will be put to the guideline if it is executed, he added.
According to an MRA official, the licences of a good number of MFIs have been cancelled, suspended and held by the regulator for breach of the set rules and regulations, guidelines on micro-credit operations until May 12 last.
The licences of 76 MFIs have been cancelled by the regulator until May 12 last. On the other hand, the licence of one MFI has been held until March last. Besides, the licences of two MFIs have been cancelled from temporarily approved MFIs as of February 24, 2016, according to the MRA data.
Currently, there are 681 MFIs in the country. Of these, licences of two MFIs have been suspended. Besides, some 204 MFIs have got approval to conduct microfinance activities on a temporary basis, the data showed.
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