To kickstart their operations, each NGO granted a conditional licence has deposited Tk 3.0 million into a dedicated bank account – the funds will be utilized to provide microloans, subject to approval by the Microcredit Regulatory Authority.
In a move aimed at bolstering financial inclusion of some of the poorest families across the nation, the Bangladesh government has issued conditional licences to 50 non-governmental organisations (NGOs) to operate microcredit initiatives over the past six months. This development brings the total number of NGOs authorized to conduct microfinance activities to 400.
Under the oversight of the Microcredit Regulatory Authority (MRA), these newly licensed microfinance institutions (MFIs) will operate under conditional licences for a three-year period. During this time, they are required to meet specific benchmarks set by the MRA to qualify for full licences. These targets include servicing a minimum of 300 small clients with loans totalling Tk 4.0 million in the first year, expanding to 600 clients with Tk 7.0 million in loans by the second year, and reaching 1,000 clients with Tk 10 million in loans by the end of the third year.
To kickstart their operations, each NGO granted a conditional licence has deposited Tk 3.0 million into a dedicated bank account – the funds will be utilized to provide microloans, subject to approval by the MRA.
The decision to award these licences follows a surge in applications from NGOs seeking to provide microcredit services, reflecting a growing interest in supporting marginalized communities through financial empowerment initiatives.
Regulatory compliance
NGOs eligible to apply for these licences include those registered under the Societies Registration Act, the Trust Act 1882, the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961, and the Company Act 1994. Beyond microcredit, NGOs engaged in various developmental activities were also considered for licensing.
Over 1,130 NGOs applied for microcredit licences nationwide, with all qualifying for conditional approval pending the fulfilment of application requirements. Given the volume of applications, the evaluation process is expected to span approximately three years, citing resource constraints within the MRA.
Established in July 2006, the Microcredit Regulatory Authority Act provided the framework for regulating NGO-operated MFIs, aiming to streamline and monitor microfinance operations across the country. Since its inception, the MRA has progressively expanded its oversight, initially focusing on regularizing existing microcredit providers before broadening its scope to include new applicants.
Despite efforts to promote financial inclusion, regulatory compliance remains a critical issue. The MRA has revoked licences from 151 NGOs at various stages due to non-compliance issues, underscoring the importance of adherence to regulatory standards in the microfinance sector.
Currently, registered MFIs cater to over 40 million individuals out of Bangladesh’s estimated population of 160 million, highlighting their significant role in advancing the government’s poverty alleviation strategies.
This latest round of licensing underscores the government’s commitment to expanding access to financial services and promoting economic self-sufficiency among underserved communities through microfinance initiatives.
