Microcredit Regulatory Authority

Microcredit program in Bangladesh is implemented by NGOs, Grameen Bank, different types of government-owned banks, private commercial banks, and specialized programs of some ministries of Bangladesh Government etc. Despite the fact that more than a thousand of institutions are operating microcredit program, but only 10 large Microcredit Institutions (MFIs) and Grameen Bank represent 87% of total savings of the sector (around BD taka 93 billion) and 81% of total outstanding loan of the sector (around BD taka 157.82 billion). Near about two hundred thousand people are employed in MFIs and Grameen Bank. Around 30 million poor people are directly benefited from microcredit programs. Through the financial services of microcredit, these poor people are engaging themselves in various income generating activities. At present, financial service of BD taka 160 billion (approx.) is being rendered among 30 million poor people which help them to be self-employed that accelerates overall economic development process of the country.

Microcredit Institutions have been providing various social and financial services to the poor to alleviate poverty from the society for the last three decades. However, they remained outside any central supervisory system. To bring microcredit sector under regulatory framework, the government of Bangladesh enacted "Microcredit Regulatory Authority Act, 2006”" on July 16, 2006 with effect from August 27, 2006. Microcredit Regulatory Authority (MRA) has been established under this Act which is empowered and responsible to monitor and supervise the microcredit activities of the MFIs. According to the Act, no MFI can operate microcredit program without obtaining licence from MRA. Within the stipulated period, 4,236 Microcredit Institutions applied for licence. Among them, 335 Microcredit Institutions have been licensed till September 2008. Applications of 438 institutions could not be considered. 2,599 small institutions are advised to fulfil minimum criteria of obtaining licence (either minimum balance of outstanding loan at field level BD taka four million or minimum borrower 1,000) within June 2009. Rest of the applications is being processed.