MICROCAPITAL BRIEF: Bangladesh Finance Minister: Management Structures in Microfinance Sector Too Dependent on Founders

Bangladesh Finance Minister A M A Muhith reportedly has urged microfinance institutions (MFIs) to adjust their management structures to ensure that the organizations do not destabilize due to the death of a founder. Alluding to such high-profile figures in the country as Sir Fazle Hasan Abed, founder of the development organization BRAC, and Dr Muhammad Yunus, founder of Grameen Bank, Minister Muhith stated that “the institutional system of a microfinance institution needs to be in such a way that the system exists all the time.”

Sir Fazle Hasan Abed reportedly responded to Minister Muhith’s statement that, while he does not believe his death would introduce serious disruptions to BRAC, “management needs to be seen from a wider perspective” and that “MFIs can take initiative not to keep the organizations at the individual level and institutionalize those.”

For the year 2010, 30 microfinance institutions (MFIs) in Bangladesh reported to the US-based nonprofit Microfinance Information Exchange (MIX) an aggregate gross loan portfolio of USD 646 million outstanding to approximately 5 million active borrowers and total deposits of USD 274 million.

By Brendan Millan, Research Associate

About Sir Fazle Hasan Abed: Sir Fazle Hasan Abed is a social worker and founder of BRAC, a development organization based in Bangladesh.

About Dr Muhammad Yunus: Dr Muhammad Yunus is a Bangladeshi banker, economist and Nobel Peace Prize recipient. As a professor of economics, he built on the concepts of microcredit and microfinance. Dr Yunus is also the founder of Grameen Bank, a Bangladeshi microfinance institution. In 2006, Dr Yunus and the bank were jointly awarded the Nobel Peace Prize. Dr Yunus himself has also received several other national and international honors.

Sources and Resources:

[1] The Financial Express: “Muhith Urges MFIS to Create Institutional Structure”, http://www.thefinancialexpress-bd.com/more.php?news_id=131352&date=2012-05-31

MicroCapital.org story, May 21, 2012, “MICROCAPITAL BRIEF: Microcredit Regulatory Authority (MRA) of Bangladesh Orders Microfinance Institutions to Obtain Permission to Offer Services Other Than Microcredit”, https://www.microcapital.org/microcapital-brief-microcredit-regulatory-authority-mra-of-bangladesh-orders-microfinance-institutions-to-obtain-permission-to-offer-services-other-than-microcredit/

MicroCapital.org story, April 30, 2012,”MICROCAPITAL BRIEF: Bangladesh Government to Investigate NGOs, Microcredit Entities for Money Laundering”, https://www.microcapital.org/microcapital-brief-bangladesh-government-to-investigate-ngos-microcredit-entities-for-money-laundering/

MicroCapital.org story, April 24, 2012, “MICROCAPITAL BRIEF: Bangladeshi Government to Investigate Muhammad Yunus, Social Businesses Associated With Microfinance Institution Grameen Bank”, https://www.microcapital.org/microcapital-brief-bangladeshi-government-to-investigate-muhammad-yunus-social-businesses-associated-with-microfinance-institution-grameen-bank/

MicroCapital.org story, March 6, 2012, “MICROCAPITAL BRIEF: Bangladeshi Microfinance Borrowers Earn $47m in Interest on Mandatory Savings; Microcredit Regulatory Authority to Boost Enforcement of Required Interest Payments by MFIs”, https://www.microcapital.org/microcapital-brief-bangladeshi-microfinance-borrowers-earn-47m-in-interest-on-mandatory-savings-microcredit-regulatory-authority-to-boost-enforcement-of-required-interest-payments-by-mfis/

MicroCapital.org story, April 26, 2011, “MICROCAPITAL BRIEF: Bangladeshi Microfinance Organization BRAC Admits to Pushing Loans to Over-Indebted Borrowers”, https://www.microcapital.org/microcapital-brief-bangladeshi-microfinance-organization-brac-admits-to-pushing-loans-to-over-indebted-borrowers/

MicroCapital Universe Profile: Fazle Hasan Abed, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Fazle+Hasan+Abed

MicroCapital Universe Profile: BRAC, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=BRAC

MicroCapital Universe Profile: Muhammad Yunus, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Muhammad+Yunus

MicroCapital Universe Profile: Grameen Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Grameen+Bank

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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