Staff Reporter :
The licensed microfinance institutions (MFIs) disbursed Tk282.2 billion as loans among their members as on December 2014.
About 19.4 million borrowers received the loans, mostly concentrated among the top 20 institutions, according to the Financial Stability Report-2014 published by Bangladesh Bank (BB).
There are 697 licensed MFIs in the country and they have expanded their country-wide network with 14,730 branches.
“The microfinance sector has been growing steadily since 1990. Effective regulation by the Microcredit Regulatory Authority (MRA) has ensured increased entrepreneurial skilled among the borrowers, and loan volume per participants, has also increased,” added the report.
Though the aggregate size of the MFIs has increased over the years, it still remains very small in comparison with that of the banking industry. It seems that, due to its smaller size and non-connectedness with banking assets and liabilities, any vulnerability in the microfinance sector has minimal impact of the stability of the financial system as a whole.
The report, however, said that participants in MFI sector are substantial in number. Thus, any disruption in this sector might adversely affect the confidence of many beneficiaries in the financial system
which might create a stability threat to the system. The experience in loan defaults in the microfinance sector is consistently lower than the banking industry which is very encouraging sign. It indicates that the check and balance in the sector is working quite efficiently in Bangladesh and the asset quality of the MFIs is better than that of the banking industry, according to the report.
“Loan disbursement was relatively concentrated among few institutions is a matter of concern,” the report said, adding, “Despite the initiative of MRA, the top 20 institutions still account for a substantial amount of loan disbursement in this sector.”
It also said that the top 20 MFIs cover almost 75 per cent of the total loan disbursement in the sector. Thus, there remains a threat that problems in a few of those institutions might adversely affect the performance of the microfinance sector as a whole.
The licensed microfinance institutions (MFIs) disbursed Tk282.2 billion as loans among their members as on December 2014.
About 19.4 million borrowers received the loans, mostly concentrated among the top 20 institutions, according to the Financial Stability Report-2014 published by Bangladesh Bank (BB).
There are 697 licensed MFIs in the country and they have expanded their country-wide network with 14,730 branches.
“The microfinance sector has been growing steadily since 1990. Effective regulation by the Microcredit Regulatory Authority (MRA) has ensured increased entrepreneurial skilled among the borrowers, and loan volume per participants, has also increased,” added the report.
Though the aggregate size of the MFIs has increased over the years, it still remains very small in comparison with that of the banking industry. It seems that, due to its smaller size and non-connectedness with banking assets and liabilities, any vulnerability in the microfinance sector has minimal impact of the stability of the financial system as a whole.
The report, however, said that participants in MFI sector are substantial in number. Thus, any disruption in this sector might adversely affect the confidence of many beneficiaries in the financial system
which might create a stability threat to the system. The experience in loan defaults in the microfinance sector is consistently lower than the banking industry which is very encouraging sign. It indicates that the check and balance in the sector is working quite efficiently in Bangladesh and the asset quality of the MFIs is better than that of the banking industry, according to the report.
“Loan disbursement was relatively concentrated among few institutions is a matter of concern,” the report said, adding, “Despite the initiative of MRA, the top 20 institutions still account for a substantial amount of loan disbursement in this sector.”
It also said that the top 20 MFIs cover almost 75 per cent of the total loan disbursement in the sector. Thus, there remains a threat that problems in a few of those institutions might adversely affect the performance of the microfinance sector as a whole.
