Chief adviser for establishing dedicated ‘Microcredit Bank’

Chief Adviser Professor Muhammad Yunus on Saturday stressed the need for establishing a dedicated ‘Microcredit Bank’ to enable microcredit to play a more significant role within the formal banking system, moving beyond its current NGO-style framework.

"We have to think about something new – the establishment of a Microcredit Bank – as the success of microcredit has reached a new height," he said.

Prof Yunus said microcredit is now seen as an NGO, and to become a full-fledged bank, it is necessary to transition from NGO to bank. "Clearly, it will have to be a bank, and we need a separate banking law," he said.

Prof Yunus said currently a microcredit organisation can collect deposits from its members only, and this needs to be expanded to give it a real shape as a bank.

Highlighting the importance of microcredit, he laid emphasis on giving more focus to the future banking system based on trust, stressing that it would be the future-oriented real banking system.

"It's the appropriate time to talk about the issue," he said, adding that the banks which were considered real banks have disappeared today with looting of public money, but microcredit exists with a transparent base.

Stressing the need for paying attention to real banks, Prof Yunus said they saw people busy with fake banks.

The chief adviser made the remarks while inaugurating the Microcredit Regulatory Authority building in the city's Agargaon area. "I feel good to be here today and meet old friends," Prof Yunus said.

Created in 1976 in Bangladesh, the Grameen Bank uses microcredit to fight against poverty.

By creating a banking system based on trust and creativity, Prof Yunus breathed new life into traditional banking mechanisms.

Finance Adviser Dr Salehuddin Ahmed, Chief Adviser’s Special Assistant Dr Anisuzzaman Chowdhury, Bangladesh Bank Governor Dr Ahsan H Mansur, Executive Vice Chairman of the Microcredit Regulatory Authority Professor Dr Mohammed Helal Uddin, and Secretary of the Financial Institutions Division Nazma Mobarek, among others, spoke at the event.

To bring non-government microfinance institutions (NGO-MFIs) under a regulatory framework, the Government of Bangladesh enacted the ‘Microcredit Regulatory Authority Act, 2006’ (Act No. 32 of 2006) in July 2006, with effect from August 27, 2006.

Under this Act, the government established the Microcredit Regulatory Authority (MRA) with a view to ensuring transparency and accountability of the microcredit activities of NGO-MFIs in the country.

The Authority is empowered and responsible to implement the said Act and to bring the microcredit sector of the country under a full-fledged regulatory framework.