Badrul Ahsan :
The micro-credit regulator (MRA) is mulling a plan to abolish loan risk fund and divert the money to the loan account, sources said.
According to data available with the regulator, the fund stood at around Tk 16 billion as of December 2015.
The micro-finance institutions (MFIs) used to deduct Tk 5.0 or more for Tk 1,000 loan to use it for mitigating the risk of loans.
As there is no legal provision, the MFIs deduct the charge from loan under many different names.
The MRA thinks MFIs do not need the provision anymore as the present rules and regulations are sufficient for securing the risk, the sources said.
Besides, successful operation of microcredit by the lenders also played a role behind the decision, they said.
A MRA director on condition of not to be named told The New Nation that they were preparing a directive to be sent to MFIs to abolish the provision and use the money as loan.
He said the MRA created some other alternative options including loan write-off provision, classification provision etc to mitigate the risks of micro-credit loans.
“Besides, as the rate of repayment of micro-credit loans is more than 99 per cent, there is no justification of having this huge sum as loan risk fund at this stage,” he said.
The authority also thought the practice started when there was no regulator for micro-credit sector but now the MRA has built a strong ground.
“The Tk 16 billion addition to the sector will certainly strengthen the micro-credit more effectively and many more new clients could benefit from the move,” he said.
However, Credit and Development Forum Chairman Emranul Huq Chowdhury said if the MRA makes such a move, MFIs would oppose it.
The country’s MFIs are running micro-credit under a very risky situation and they do not keep any collateral against the loan, he pointed out.
“So we need the fund and we hope the MRA will sit with us before finalising the decision,” Huq said.
Currently, the number of MFIs stands at 906, including 208, which got licences for three years to prove their ability to continue operation.
The sector at present has 20 million borrowers and 26 million members and its total outstanding loan is now Tk 350 billion.
The micro-credit regulator (MRA) is mulling a plan to abolish loan risk fund and divert the money to the loan account, sources said.
According to data available with the regulator, the fund stood at around Tk 16 billion as of December 2015.
The micro-finance institutions (MFIs) used to deduct Tk 5.0 or more for Tk 1,000 loan to use it for mitigating the risk of loans.
As there is no legal provision, the MFIs deduct the charge from loan under many different names.
The MRA thinks MFIs do not need the provision anymore as the present rules and regulations are sufficient for securing the risk, the sources said.
Besides, successful operation of microcredit by the lenders also played a role behind the decision, they said.
A MRA director on condition of not to be named told The New Nation that they were preparing a directive to be sent to MFIs to abolish the provision and use the money as loan.
He said the MRA created some other alternative options including loan write-off provision, classification provision etc to mitigate the risks of micro-credit loans.
“Besides, as the rate of repayment of micro-credit loans is more than 99 per cent, there is no justification of having this huge sum as loan risk fund at this stage,” he said.
The authority also thought the practice started when there was no regulator for micro-credit sector but now the MRA has built a strong ground.
“The Tk 16 billion addition to the sector will certainly strengthen the micro-credit more effectively and many more new clients could benefit from the move,” he said.
However, Credit and Development Forum Chairman Emranul Huq Chowdhury said if the MRA makes such a move, MFIs would oppose it.
The country’s MFIs are running micro-credit under a very risky situation and they do not keep any collateral against the loan, he pointed out.
“So we need the fund and we hope the MRA will sit with us before finalising the decision,” Huq said.
Currently, the number of MFIs stands at 906, including 208, which got licences for three years to prove their ability to continue operation.
The sector at present has 20 million borrowers and 26 million members and its total outstanding loan is now Tk 350 billion.
