Badrul Ahsan :
The Microcredit Regulatory Authority (MRA) is planning to impose a 0.15 per cent service charge on the interest income of microfinance institutions (MFIs).
To this effect, the microcredit regulator has recently sent a proposal to the Ministry of Finance for approval. After getting approval, the proposal will be sent to the Ministry of Law for vetting, MRA sources said.
The new move will help the regulator to earn some Tk 140 million from the newly proposed service charge from around Tk 75 billion interest income of the sector, added the sources.
The proposal has come as replacement of the annual fee, the country’s MFIs pay to the MRA yearly-based on the number of borrowers an MFI has.
The MRA is planning to introduce the new service charge from the next fiscal year (2016-2017).
“The amount is very nominal in comparison with the sector’s total interest income and the new service charge aims to meet the expenditure of improving service quality for the country’s MFIs,” MRA Director Shazzad Hossain told The New Nation on Tuesday.
Hossain said, “This is nothing new. Other regulatory bodies, including Bangladesh Bank and Insurance Development and Regulatory Authority, impose such kinds of income generating charges.”
Meanwhile, the MFIs are ready to welcome the decision cautiously as they want to keep the option of opposing it if the amount of the charge increases in future.
Emranul Huq Chowdhury, Chairman of Credit and Development Forum (CDF) said that most of the members of CDF have agreed to welcome the move.
“But we are afraid the regulator might increase the amount of service charge every year,” he said.
Chowdhury, also Executive Director and CEO of UDDIPAN, said MRA needs more financial support from the government as the sector is growing day by day. But the government is reluctant to provide as much support as the regulator needs.
Besides, the term of a donor fund, which had been supporting the regulator for the last eight years, ended in December 2015.
The United Kingdom’s Department for International Development (DFID) extended the project for the last time in June 30 last year, which was taken up eight years ago to strengthen the microfinance regulator, an official said.
The DFID provided Tk 370 million in 2007 to help capacity building of the MRA.
The DFID support was instrumental in providing the MRA with core operational funding in its early years before the government resources became available.
It also provided technical expertise on framing regulations, doing economic analysis and building IT network.
Currently, the number of the country’s MFIs stands at 905. Of them, 206 got licences for three years to prove their eligibility to be able to continue operation. At present, the sector has 20 million borrowers and 26 million members and its total outstanding loan is now Tk 350 billion.
The Microcredit Regulatory Authority (MRA) is planning to impose a 0.15 per cent service charge on the interest income of microfinance institutions (MFIs).
To this effect, the microcredit regulator has recently sent a proposal to the Ministry of Finance for approval. After getting approval, the proposal will be sent to the Ministry of Law for vetting, MRA sources said.
The new move will help the regulator to earn some Tk 140 million from the newly proposed service charge from around Tk 75 billion interest income of the sector, added the sources.
The proposal has come as replacement of the annual fee, the country’s MFIs pay to the MRA yearly-based on the number of borrowers an MFI has.
The MRA is planning to introduce the new service charge from the next fiscal year (2016-2017).
“The amount is very nominal in comparison with the sector’s total interest income and the new service charge aims to meet the expenditure of improving service quality for the country’s MFIs,” MRA Director Shazzad Hossain told The New Nation on Tuesday.
Hossain said, “This is nothing new. Other regulatory bodies, including Bangladesh Bank and Insurance Development and Regulatory Authority, impose such kinds of income generating charges.”
Meanwhile, the MFIs are ready to welcome the decision cautiously as they want to keep the option of opposing it if the amount of the charge increases in future.
Emranul Huq Chowdhury, Chairman of Credit and Development Forum (CDF) said that most of the members of CDF have agreed to welcome the move.
“But we are afraid the regulator might increase the amount of service charge every year,” he said.
Chowdhury, also Executive Director and CEO of UDDIPAN, said MRA needs more financial support from the government as the sector is growing day by day. But the government is reluctant to provide as much support as the regulator needs.
Besides, the term of a donor fund, which had been supporting the regulator for the last eight years, ended in December 2015.
The United Kingdom’s Department for International Development (DFID) extended the project for the last time in June 30 last year, which was taken up eight years ago to strengthen the microfinance regulator, an official said.
The DFID provided Tk 370 million in 2007 to help capacity building of the MRA.
The DFID support was instrumental in providing the MRA with core operational funding in its early years before the government resources became available.
It also provided technical expertise on framing regulations, doing economic analysis and building IT network.
Currently, the number of the country’s MFIs stands at 905. Of them, 206 got licences for three years to prove their eligibility to be able to continue operation. At present, the sector has 20 million borrowers and 26 million members and its total outstanding loan is now Tk 350 billion.
