MICROCAPITAL BRIEF: Government of Bangladesh to Limit Interest Rates for Microfinance Institutions (MFIs)

The Finance Minister of Bangladesh, Mr Abul Maal Abdul Muhith, recently told the Bangladeshi Parliament that, in collaboration with Transparency International Bangladesh, an international non-governmental organization aimed at fighting corruption, the government would limit interest rates charged by microfinance institutions (MFIs).

As reported in a MicroCapital story in May 2009, the Microcredit Regulatory Authority (MRA) of Bangladesh temporarily limited the interest rates MFIs charged clients to a flat 15 percent or an effective rate of 30 percent. An MRA official noted that the move was an interim measure, and that MRA would announce a final interest rate policy for MFIs after “conducting an in-depth study.”

The new limit has not yet been announced.

By Stefanie Rubin, Research Associate

About the Microcredit Regulatory Authority (MRA):

The Microcredit Regulatory Authority (MRA) has three primary functions: to license 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 the Chairman of MRA.

Additional Resources:

Source Article: bdnews24.com: “Government to Fix Micro Credit Interest,” April 5, 2010.

MicroCapital Universe profile: Microcredit Regulatory Authority (MRA)

MICROCAPITAL BRIEF: Mohammed Yunus, Founder of Grameen Bank, Calls for Standardized Interest Rate for Microfinance Institutions (MFIs) and Strict Definition of “Microcredit” in Bangladesh March 22, 2010.

MICROCAPITAL BRIEF: Microcredit Regulation Authority of Bangladesh to Make Public the Interest Rates Charged by Microfinance Institutions (MFIs) March 16, 2010.

MICROCAPITAL STORY: Bangladesh Microcredit Regulatory Agency (MRA) Limits Interest Rates for Microfinance Institutions May 2009

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