Microcredit Regulatory Authority
Encyclopedia
Microcredit Regulatory Authority (MRA) is the central body to monitor and supervise microfinance
operations of non-governmental organization
s of the Republic of Bangladesh
. It was created by the Government of Peoples’ Republic of Bangladesh under the Microcredit Regulatory Authority Act (Act no. 32 of 2006). License from the Authority is mandatory to operate microfinance operation in Bangladesh as an NGO.
, different types of government-owned banks, private commercial bank
s, and specialized programs of some ministries of the Bangladesh Government, etc. Despite the fact that more than a thousand institutions are operating microcredit programs, only 10 large Microcredit Institutions (MFIs) and Grameen Bank represent 87% of total savings of the sector (around BD taka 93 billion) and 81% of total outstanding loans of the sector (around BD taka 157.82 billion). Nearly two hundred thousand people are employed in MFIs and Grameen Bank. Around 30 million poor people are directly benefiting from microcredit programs. Through the financial services of microcredit, these poor people are engaging themselves in various income generating activities. At present, financial service of BD taka 160 billion (approx.) is being rendered among 30 million poor people which help them to be self-employed
which helps to accelerate the overall economic development
process of the country.
Microcredit institutions have been providing various social and financial services
to the poor to alleviate poverty within the society for the last three decades. However, they remained outside any central supervisory system. To bring the microcredit sector under a regulatory framework, the government of Bangladesh enacted the “Microcredit Regulatory Authority Act, 2006” on July 16, 2006 with effect from August 27, 2006. The Microcredit Regulatory Authority has been established under this Act and is empowered and responsible for monitoring and supervising the microcredit activities of the MFIs. According to the Act, no MFI can operate microcredit programs without obtaining a licence from MRA. Within the stipulated period, 4,236 microcredit institutions applied for a licence. Among them, 335 microcredit institutions have been licensed until September 2008. Applications by 438 institutions could not be considered. 2,599 small institutions are advised to fulfil minimum criteria of obtaining a licence (either minimum balance of outstanding loan at field level BD taka four million or minimum borrower 1,000) within June 2009.
Microfinance
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
operations of non-governmental organization
Non-governmental organization
A non-governmental organization is a legally constituted organization created by natural or legal persons that operates independently from any government. The term originated from the United Nations , and is normally used to refer to organizations that do not form part of the government and are...
s of the Republic of Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
. It was created by the Government of Peoples’ Republic of Bangladesh under the Microcredit Regulatory Authority Act (Act no. 32 of 2006). License from the Authority is mandatory to operate microfinance operation in Bangladesh as an NGO.
Microcredit in Bangladesh
The microcredit program in Bangladesh is implemented by NGOs, Grameen BankGrameen Bank
The Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans to the impoverished without requiring collateral...
, different types of government-owned banks, private commercial bank
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
s, and specialized programs of some ministries of the Bangladesh Government, etc. Despite the fact that more than a thousand institutions are operating microcredit programs, only 10 large Microcredit Institutions (MFIs) and Grameen Bank represent 87% of total savings of the sector (around BD taka 93 billion) and 81% of total outstanding loans of the sector (around BD taka 157.82 billion). Nearly two hundred thousand people are employed in MFIs and Grameen Bank. Around 30 million poor people are directly benefiting from microcredit programs. Through the financial services of microcredit, these poor people are engaging themselves in various income generating activities. At present, financial service of BD taka 160 billion (approx.) is being rendered among 30 million poor people which help them to be self-employed
Self-employment
Self-employment is working for one's self.Self-employed people can also be referred to as a person who works for himself/herself instead of an employer, but drawing income from a trade or business that they operate personally....
which helps to accelerate the overall economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
process of the country.
Microcredit institutions have been providing various social and financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
to the poor to alleviate poverty within the society for the last three decades. However, they remained outside any central supervisory system. To bring the microcredit sector under a regulatory framework, the government of Bangladesh enacted the “Microcredit Regulatory Authority Act, 2006” on July 16, 2006 with effect from August 27, 2006. The Microcredit Regulatory Authority has been established under this Act and is empowered and responsible for monitoring and supervising the microcredit activities of the MFIs. According to the Act, no MFI can operate microcredit programs without obtaining a licence from MRA. Within the stipulated period, 4,236 microcredit institutions applied for a licence. Among them, 335 microcredit institutions have been licensed until September 2008. Applications by 438 institutions could not be considered. 2,599 small institutions are advised to fulfil minimum criteria of obtaining a licence (either minimum balance of outstanding loan at field level BD taka four million or minimum borrower 1,000) within June 2009.
Legal requirement to be an NGO-MFI
The organization/person willing to operate microcredit activities in Bangladesh shall submit an application to the MRA in the prescribed form and manner after getting registration as an NGO under any of the following acts:- The Societies Registration Act, 1860 (Act XXI of 1860);
- The Trust Act, 1882 (Act II of 1882);
- The Voluntary Social Welfare Agencies (Registration and Control) Ordinance, 1961 (Ordinance No. XLVI of 1961);
- The Companies Act, 1994 (Act XVIII of 1994).