Bangladesh Bank governor Dr Atiur Rahman on Thursday said initiatives are desperately needed to identify suitable disaster-risk reduction products and services, which would help micro finance institutions (MFIs) mainstream disaster-risk reduction strategies in the country.
"Psychologically, microfinance borrowers face shocking experiences during disasters and the loan loss is even more traumatic for them due to disruption in market mechanisms," he told a validation workshop at Hotel Ruposhi Bangla in the city.
Comprehensive Disaster Management Programme (CDMP), Disaster Management and Relief Division of the Ministry of Food and Disaster Management organised the workshop on 'Disaster Risk Reduction Products and Strategies for Micro finance Sector in Bangladesh.'
Representatives from different MFIs and government bodies were present.
Speaking as the chief guest Dr. Rahman said Bangladesh is one of the most disaster prone countries in the world. Life and livelihood of microfinance sector are affected by disasters. Disaster, vulnerability, poverty and microfinance sector therefore have the synergy effects.
"Currently there is no acceptable standard product that could work as safeguard for microfinance sector during disaster. Besides, there are no unified principles and guidelines in managing disaster management funds created by several big, medium and small MFIs", he said.
PKSF has mobilised Tk 400 crore and its partner organisations mobilised generous amounts as well. Besides, several big, medium and small MFIs also created disaster management fund. A common fund should be mobilised through a network of apex organisation, government, donors and respective organizations, the governor said.
He said all development actors are directly or indirectly vulnerable to disasters and a disaster might damage the progress that has been achieved through lots of efforts, resources and initiatives.
"Therefore, all development actors, either in the government or non-government sectors, need to have an effective disaster risk reduction strategy which is mutually supportive," he added.
Atiur said the MFIs need to frame an effective disaster risk reduction strategy to sustain their development efforts for themselves and their clients. "A comprehensive pre-disaster planning of MFIs may significantly help reduce vulnerabilities through planned actions."
Atiur said the central bank has developed guidelines to ensure a level-playing field for mobile banking which will be a key component to achieve financial inclusion targets.
"We'll remain committed to maintaining a stable macro environment and a regulatory environment safeguarding people's money while ensuring that microfinance institutions have the flexibility to develop financial products to suit poor people's needs."