BRAC (formerly Bangladesh Rehabilitation Assistance Committee), a Bangladeshi development organization that was established in 1972, reportedly admitted to pushing loans to borrowers that could not afford them. Shameran Abed, program head of microfinance at BRAC, was cited by Irin Asia as saying that an overabundance of funds, the absence of a strong regulatory body and a lack of data on borrowers were to blame for microfinance institutions’ (MFIs’) tactics. Although the Microcredit Regulatory Authority (MRA) was established in Bangladesh in 2006 to supervise MFIs, the organization remains understaffed and underfunded according to Prodip Chandra Roy, assistant director of research at MRA.
In 2010, a controversial Norwegian documentary argued that high microloan interest rates leave many Bangladeshi borrowers unable to repay their debts and that MFIs often employ aggressive loan recovery methods. Lamia Karim, an associate professor at the United States’ University of Oregon who has studied microfinance for fifteen years, was quoted as saying, “Grameen, BRAC, ASA and Proshika all strong-armed women into paying back. In extreme cases homesteads are taken apart and the timber and tin sold off.” The organizations have denied the allegations.
By Julie Moksim, Research Associate
About BRAC (Bangladesh Rehabilitation Assistance Committee): Established in 1972, BRAC (Bangladesh Rehabilitation Assistance Committee) is a development organization based in Bangladesh. According to its website, “BRAC works with people whose lives are dominated by extreme poverty, illiteracy, disease and handicaps. With multifaceted development interventions, BRAC strives to bring about change in the quality of life of poor people in Bangladesh.” In 2009, BRAC deployed around USD 535 million toward its developmental efforts.
About the Microcredit Regulatory Authority (MRA): The Microcredit Regulatory Authority (MRA) is Bangladesh’s primary regulator over microfinance activities. MRA has three primary functions: to license microfinance institutions (MFIs), to supervise MFIs for compliance with licensing requirements and to enforce sanctions against non-compliance. In addition, MRA monitors microfinance activity through audits and addresses customer complaints. The Board of Directors, which oversees the governance of MRA, consists of heads of executive levels of government including the governor of Bangladesh Bank, Dr Atiur Rahman who serves as Chairman as of April 2011.
Sources and Additional Resources:
Irin Asia: “Bangladesh: Microfinance Institutions Pushed Loans, Admits Major NGO”, April 20, 2011, http://www.irinnews.org/report.aspx?ReportID=92528
MicroCapital.org Brief, January 25, 2011: Microfinance Under Scrutiny -Arguments for and Against from the Daily Star of Bangladesh and Forbes Magazine, https://www.microcapital.org/microcapital-brief-microfinance-under-scrutiny-arguments-for-and-against-from-the-daily-star-of-bangladesh-and-forbes-magazine/
MicroCapital.org Brief, November 18, 2010: Bangladesh Microcredit Regulatory Authority (MRA) to Restrict Fees, Cap Microloan Interest Rates at 27%, Discourage Flat Interest Rates, https://www.microcapital.org/microcapital-brief-bangladesh-microcredit-regulatory-authority-mra-to-restrict-fees-cap-microloan-interest-rates-at-27-discourage-flat-interest-rates/
Flip the Coin. Information on “Caught in Micro Debt” Documentary
http://www.flipthecoin.org/?p=301
MicroCapital’s Microfinance Universe Profile: BRAC (Bangladesh Rehabilitation Assistance Committee)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=BRAC
MicroCapital’s Microfinance Universe Profile: Microcredit Regulatory Authority (MRA)
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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