MICROCAPITAL BRIEF: Microcredit Regulatory Authority (MRA) of Bangladesh Regulates Fixed Assets of Microfinance Institutions (MFIs)

The Microcredit Regulatory Authority (MRA), a Bangladeshi government authority that oversees the operations of nongovernmental organization (NGO) microfinance institutions (MFIs), reportedly has regulated investments in fixed assets by microfinance institutions (MFIs) in the country. The regulation stipulates that MFIs may not invest more than 35 percent of their “cumulative earning surplus”[1] in fixed assets such as real estate. MFIs are also required to liquidate existing assets if they exceed the 35 percent threshold. MRA granted a grace period under which MFIs have until November 2016 to implement the regulation.

In addition to the limitation on the use of profits, Shazzad Hossoin, the director of MRA, said that “the Micro Credit Regulatory Authority Act 2006 and MRA Rules 2010 stated […] how to spend funds of a MFI”[1] including the provision that “no microcredit organisation will use the deposit fund for purchase of any moveable or immovable asset or to meet any expenses”[1].

As of June 2014, MRA reported 697 licensed NGO-MFIs serving approximately 25 million clients in the country with total outstanding loans of BDT 278 billion (USD 3.6 billion) and total deposits of BDT 113 billion (USD 1.4 billion).

By Alíz Crowley, Research Associate

About Microcredit Regulatory Authority (MRA)

The Microcredit Regulatory Authority (MRA) monitors and supervises microfinance operations of non-government organisations in Bangladesh. It was created by the government of the Peoples’ Republic of Bangladesh under the “Microcredit Regulatory Authority Act” of 2006. MRA has three primary functions: to license MFIs, to supervise MFIs for compliance with licensing requirements and to enforce 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 Authority. As of June 2014, MRA reported 697 licensed NGO-MFIs serving approximately 25 million clients in the country with total outstanding loans of BDT 278 billion (USD 3.6 billion) and total deposits of BDT 113 billion (USD 1.4 billion).

Sources and Additional Resources

[1] The Financial Express, Ceiling on investment in fixed assets by MFIs set

[2] Microcredit Regulatory Authority, All Circular Letters and Notices for MFIs

[3] Microcredit Regulatory Authority, An Overview of Microcredit in Bangladesh

MicroCapital Universe Profile: Microcredit Regulatory Authority (MRA)

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