Leaders of microfinance institutions (MFI) on Wednesday demanded the government should give permission for setting up a Micro Credit Bank to make capital available for micro credit institutions.
The demand came up at the National Microfinance Conference held at Bangabandhu International Conference Centre on the day.
Credit and Development Forum (CDF), a platform of microfinance organizations, arranged the conference presided over by BRAC founder chairperson Fazle Hasan Abed.
Finance minister Abul Maal Abdul Muhith addressed the conference as chief guest while Bangladesh Bank governor Atiur Rahman was a special guest.
‘It is high time to consider the demand for establishing a micro credit bank in the country as such banks have already been set up in many countries around the world… I hope the government will immediately consider this issue,’ Fazle Hasan Abed said.
‘It is a very genuine demand of the micro credit providers. The government should allow such a bank,’ he said.
Abed also said that defaulter borrowers now can take loans from other MFIs, but it should be stopped.
Palli Karma Sahayak Foundation chairman Qazi Kholiquzzaman Ahmad and CDF chairman Mosharraf Hossain called for giving permission to set up a micro credit bank.
In his address, finance minister AMA Muhith did not make any comment on allowing any micro credit bank.
He, however, asked the microfinance providers to ensure institutionalisation in the operating system of their organisations so that they do not become dependent on any ‘individual as individualism becomes a curse for the sector.’
Microfinance institutions should get rid of such curse, he added.
‘You [micro credit financer] will have to ensure taking organisations out of control of individuals by adopting institutionalisation policy so that it cannot get stuck in the grip of any person,’ finance minister said.
He said microfinance organisations should adopt a succession plan to ensure that their institutions would run smoothly if any one leaves the office. No single person should be made indispensable for running any organization, Muhith added.
He pointed out that micro credit had some problems like overlapping in lending which should have to be addressed.
Many clients are trapped in borrowing in which he or she takes loans to repay the previous loans, he said adding, ‘They cannot come out of such vicious circle.’
Admiring micro credit borrowers for their regular payment of installments, the finance minister said that they were good borrowers. They do not become loan defaulter like rich men.
Atiur Rahman said the MFIs should introduce more products for their clients so that they could get better financial services.
Kholiquzzaman said that micro credit organisations would have to address some problems as many of them could not follow the rules on imposing of 27 per cent interest rate on loans fixed by the micro credit regulatory authority.
There are a lot of instances of imposing higher interest rates on loans, particularly seasonal and livestock loans, he said.
Citing some research, he said that only seven per cent micro credit borrowers had been able to improve their standard of living upper to a sustainable level.
‘We have to work on this issue why the remaining 93 per cent could not change their life by using micro credit,’ he said.