New Delhi, Jan 19 (IANS) Bangladesh’s proposed ‘Microfinance Bank Ordinance 2025’, to convert the country’s microcredit system into fully regulated microfinance banks under supervision of Bangladesh Bank, could marginalise hundreds of smaller NGOs and poor households from accessing credit, a report has said.

New microfinance banking rules has drawn sharp criticism from 17 leading Microfinance Institutions (MFIs) in Bangladesh, including BRAC (Building Resources Across Communities), ASA (Association for Social Advancement), and TMSS (Thengamara Mohila Sabuj Sangha), the report from Finance Today said.

Analysts said the rules could centralise power among a few large institutions and marginalise hundreds of smaller NGOs.

The draft ordinance imposed high capital thresholds — Bangladeshi Taka (BDT) 500 crore in authorised capital and BDT 200 crore paid‑up, which critics said most microfinance institutions cannot meet.

“Practically, only a handful of large institutions, such as BRAC, ASA, BURO Bangladesh, and TMSS, will qualify. Smaller NGOs, despite their extensive local networks, will effectively be excluded from participation,” the report added.

Analysts said a more phased approach with lower initial paid‑up capital of BDT 50–100 crore could allow many more organizations to become microfinance banks.

“A balanced approach — flexible capital thresholds, phased compliance, and pathways for small NGOs to transition gradually — is urgently needed,” the report urged.

It also highlighted microfinance’s central role in Bangladesh’s financial inclusion, with about 731 licensed MFIs operating across 25,000 branches and taking credit to over 45 million people.

The core strength of microfinance has always been proximity, trust, and flexibility, enabling loans without conventional collateral and supporting the poorest households, it said.

In fiscal 2023 MFIs disbursed roughly BDT 2,49,000 crore (about $28 billion) in loans with a 98 per cent repayment rate and nearly 91 per cent of borrowers being women.

The policy largely benefits large institutions while marginalising the very grassroots NGOs that have empowered millions of poor families for decades, analysts said.

The reforms “risks becoming a silent death knell for Bangladesh’s small NGOs while delivering a bonanza for the largest institutions,” the report noted.

—IANS

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