No new licences for MFIs

No new licences will be issued to microfinance institutions (MFIs), as the microfinance sector in Bangladesh is now overcrowded, said Dr Mohammad Helal Uddin, Executive Vice Chairman of the Microcredit Regulatory Authority (MRA).

He made the remarks while speaking as the chief guest at an event organised by BRAC at the BRAC Centre in Dhaka on Thursday. The event celebrated BRAC's achievement of becoming the only organisation in Bangladesh to receive the Client Protection Certification (CPC) Gold, a recognition for its commitment to safeguarding clients' interests in financial services.

In his address, Dr. Helal Uddin emphasised the importance of scaling up and localising microcredit operations to sustain the sector at this time when foreign aid is in decline.

He suggested that major MFIs such as BRAC and ASA could reduce interest rates on microloans by one to two percentage points without jeopardising their operational viability.

"A committee is currently reviewing the matter of interest rates. Once the report is submitted, a decision will be made. However, I can assure that interest rates will not be increased under any circumstances," he said, adding a note of caution that abrupt decisions without considering market realities might prove harmful.

Currently, BRAC's average interest rate on microloans stands at 24 per cent.

Dr. Helal Uddin also stressed the need for greater financial access for marginalised communities, particularly small borrowers, who are often excluded from formal banking services.

He described BRAC as a model institution in this space.

"Programmes by organisations like BRAC are reinforcing the economic foundation of Bangladesh. Their contributions in the health, education, and social security sectors are invaluable. Government collaboration with non-governmental organisations will be key to shaping the country's future," Dr Helal Uddin added.

BRAC officials expressed concern regarding the gradual decline in foreign funding for microfinance operations, which has forced the organisation to rely increasingly on self-generated income to support its social development programmes.

They noted that any reduction in interest rates could adversely affect their activities.

The CPC Gold certification, awarded by the international organisation MicroFinanza Rating (MFR), is the highest global recognition for ensuring client protection and responsible financial services. It is based on eight international principles, including client-centric product design, prevention of over-indebtedness, transparency, responsible pricing, data privacy, and effective complaint-resolution mechanisms.

For over five decades, BRAC's Microfinance Programme has led financial inclusion efforts across Bangladesh, reaching more than 40 million people -- 90 per cent of them are women. It has enabled millions of small entrepreneurs, farmers, and women to build economic resilience and improve their livelihoods.

Md Saeed Kutub, Additional Secretary of the Financial Institutions Division at the Ministry of Finance, lauded BRAC's achievement, calling it not only a milestone for the institution but also a moment of national pride.

"It reflects BRAC's pivotal role in supporting communities, even in the face of the many challenges inherent in the microfinance sector," he said.

Asif Saleh, Executive Director of BRAC, said, "Recognition comes with responsibility. As a market leader, BRAC Microfinance is committed to expanding access to financial services, especially in hard-to-reach areas. We aim to ensure that everyone, particularly the underserved, has the opportunity to improve their economic condition with dignity and self-reliance."

In his welcome address, Arinjoy Dhar, Senior Director of BRAC's Microfinance Programme, noted that in 2025, BRAC became one of only eight organisations worldwide to receive the MFR Gold Certification.

He dedicated the achievement to the dedication and hard work of field staff who directly interact with clients.

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