MICROCAPITAL BRIEF: Committee in Bangladesh Considering Cutting Microcredit Interest Rate Cap Below 24%

The Bangladeshi government recently convened a committee to “analyze cost of the MFIs’ [microfinance institutions’] services and to determine if there is any scope to reduce the charges” with a nationwide cap. The committee, which includes 11 representatives of government, industry and observers, is headed by the Chairperson of an MFI, Dr A K M Saiful Majid of Grameen Bank.

The Microcredit Regulatory Authority (MRA) of Bangladesh is required to form such a committee each two years. Previous committees first capped the rate in 2010 – at 27 percent per year – and then cut the maximum rate to 24 percent in 2019.

The role of MRA is to monitor and supervise the microfinance operations of NGOs in Bangladesh. Created in 2006, the entity has three primary functions: licensing MFIs; supervising MFIs for compliance with licensing requirements; and enforcing sanctions in cases of non-compliance. In addition, MRA conducts audits and addresses customer complaints. The Board of Directors of MRA consists of government officials including the governor of Bangladesh Bank, the country’s central bank.

By Nithin Naren, Research Associate

Sources and Additional Resources

The Financial Express article
https://thefinancialexpress.com.bd/trade/govt-moves-to-cut-microcredit-service-charge-1662349021

Previous MicroCapital article on MRA
/microcapital-brief-microcredit-regulatory-authority-mra-of-bangladesh-regulates-fixed-assets-of-microfinance-institutions-mfis/

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