The government has decided to provide licence to new Micro Finance Institutions (MFIs) after eight years to expand small loan operation in new areas across the country.
The Microcredit Regulatory Authority (MRA) recently invited applications following rising interest among new NGOs, which had sought licence for running microcredit operation.
The NGOs that are registered under any of these laws - the Societies Registration Act, the Trust Act 1882, the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961, and the Company Act 1994 - can apply for the licence.
Each of the interested NGOs will be required to show Tk 3.0 million in its bank account as deposit for starting operation. The amount will be used for providing small loans subject to permission of the MRA, according to its circular.
The selected NGOs-MFIs will get licence primarily for three years, it said.
The selected organisations will be required to have minimum 300 small clients and outstanding loan amounting to Tk 4.0 million each in the first year, which will be minimum 600 clients and Tk 7.0 million loan in the second year, and minimum 1,000 clients and Tk 10 million loan in the third year for getting final licence.
The NGOs that are now engaged in various development activities, except microcredit, will qualify for obtaining licence.
"We have received many requests from interested NGOs for awarding new licence (to those), and that is why we've decided to allow new MFIs," said MRA Director Mohammad Yakub Hossain.
"Besides, there is a vacuum, created for cancellation of licences of a number of NGOs-MFIs."
In July 2006, the then government enacted the Microcredit Regulatory Authority Act 2006 to bring the NGOs-MFIs under a regulatory framework, which became effective from August 27, 2006.
The MRA then invited applications for the first time for microcredit operation, especially for legalising those which had already been in operation.
"We received 4,300 applications in 2006-07, but found that only 758 NGOs were competent for microcredit operation," Mr Yakub said.
In the second phase, the MRA invited applications from 37 poverty-stricken districts and received 1,212 bids.
The regulator marked out the areas then to avoid overlapping of small lending/borrowing services and also to help meet goals of the government's poverty alleviation programmes.
The MRA finally awarded 122 licences in 2014 after three years of observation.
However, the regulator cancelled licences of 133 NGOs-MFIs in different phases for compliance-related deficiency in their operation.
"Now we have 747 NGOs-MFIs under the regulator, and there are rooms for more MFIs (in the country)," the MRA director noted.
"We want to expand the services of NGOs-MFIs in the country's remotest areas as an alternative to formal banks to help the government to include more people in banking," he added.
Currently, the registered MFIs are serving around 40 million of the country's 160 million people. The MRA is the central body to monitor and supervise microfinance operations in the country.