Bangladesh Bank Governor Dr. Atiur Rahman on Thursday said the country has achieved scale in micro credit in an unprecedented manner and one of the reasons it has managed to do so relates to the relatively light touch regulations that the industry faces.

“We are striving to achieve the balance of ensuring that microfinance institutions have the space to innovate while maintaining oversight of poor people’s money,” Governor added.

He was addressing a Validation Workshop on “Disaster Risk Reduction Products and Strategies for Microfinance Sector in Bangladesh” organised by Comprehensive Disaster Management Programme (CDMP II), Disaster Management and Relief Division, Ministry of Food and Disaster Management at Ruposhi Bangla Hotel.

The Governor pointed out that a careful assessment of disaster risk reduction products and services is of great importance to policymakers, programme managers and the stakeholders not only in policymaking but also in the formulation of an effective strategy for microfinance sector in managing disaster.

Atiur said the central bank has developed guidelines to ensure a level playing field for mobile banking which will be a key component of achieving financial inclusion targets. Microfinance industry as a whole will certainly be benefitted from fast expanding mobile banking as this will reduce the cost of delivery and recovery of small loans in addition to improving transparency.

“Financial inclusion essentially aims to provide flexible financial services – savings, insurance and credit – to those who currently do not have access to these services. The central bank is committed to advancing this agenda. We have taken a number of initiatives to promote financial inclusion including creation of Ten Taka account; promoting credit to sharecroppers in partnership with BRAC; ensuring at least half of the newly opened bank branches in the rural areas; licensing of mobile banking and the SME refinancing window,” the Governor added.

MFIs need to frame an effective disaster risk reduction strategy in order to sustain their development efforts for themselves and their clients, the Governor said adding, a comprehensive pre-disaster planning of MFIs may significantly help reduce vulnerabilities through planned actions.

“Psychologically microfinance borrowers face traumatic experiences during disaster and the loan loss is even more traumatic for borrowers due to disruption of market mechanism. In such situation, initiatives are strongly needed to identify suitable disaster risk reduction products and services which would help MFIs mainstreaming disaster risk reduction strategies in Bangladesh”, he added