Reportedly at the request of microfinance institutions (MFIs) in the country, Bangladesh’s Microcredit Regulatory Authority (MRA) has agreed to lower the number of instalments for microloans and reduce the grace period allowed, so that MFIs may begin collecting repayments 15 days after loan disbursement. Although an interest rate cap of 27 percent will continue to be imposed, the number of repayment instalments has been reduced from 50 to 46, so that clients will be expected to payback larger portions of their loans at each payment. According to MRA Director Sazzad Hossain, the new regulation is an effort to help MFIs reduce the risk of client default and to maintain liquidity while retail loans are unavailable during emergencies or bank holidays.
By Rohan Trivedi, Research Associate
About The Microcredit Regulatory Authority (MRA):
The Microcredit Regulatory Authority (MRA) is Bangladesh’s primary regulator over the microfinance activities of NGO micofinance institutions (MFIs). 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 Chairman.
Sources and Additional Resources:
[1] The Financial Express: “Regulator keeps interest rate cap intact, relaxes repayment rules”, http://www.thefinancialexpress-bd.com/more.php?news_id=139289&date=2011-06-15
MicroCapital.org story, November 18, 2010: “MICROCAPITAL BRIEF: 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/
MicroCapital.org story, October 15, 2010: “MICROCAPITAL BRIEF: Interest Rates Charged by Bangladeshi Microfinance Institutions (MFIs) to be Capped”, https://www.microcapital.org/microcapital-brief-interest-rates-charged-by-bangladeshi-microfinance-institutions-mfis-to-be-capped/
MicroCapital Universe Profile: Microcredit Regulatory Authority (MRA), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microcredit+Regulatory+Authority+%28MRA%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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