Hundreds of small NGOs under threat due to new MRA conditions

Bangladesh's microfinance regulator, the Microcredit Regulatory Authority (MRA), has been accused of biased behavior. Those concerned claim that after the change of regime on August 5, 2024, the regulatory authorities made appointments to the top positions in the organization breaching the law. Moreover, the conditions those are being imposed in the new policy, will effectively shut down small NGOs and pave the way for the establishment of a monopoly by large institutions. Although, the policy later was decided to be suspended due to the efforts of various stakeholders, no notification has been issued in this regard so far.

MRA is an autonomous government regulatory body formed to ensure transparency, accountability and good governance of microfinance institutions in Bangladesh. Obtaining a license from MRA is mandatory for non-governmental voluntary organizations to operate microfinance activities. Currently, Bangladesh's microfinance sector is one of the largest in the world, where 91 percent of borrowers are women. As a result, the economic status of most of the women and families in this country is directly related to any decision or action taken by this regulatory body.

There have been allegations that the Executive Vice Chairman (EVC) of the organization has been appointed without fulfilling the eligibility conditions mentioned in Section 10 of the MRA Act. After the appointment, illegal cancellation of licences of various institutions or illegal interference in the management of microfinance institutions is increasing.

Apart from this, there have been allegations of important documents being withheld for months. Due to the delay in getting the necessary information from the MRA, the share of bank loans in microfinance institutions has dropped from 22 percent to 14 percent. Not only loan activities, but also social development projects and budget approvals are being held up.

It is learned that the MRA issued a circular on March 31, 2026. In this, the minimum number of borrowers for microfinance institutions has been set at 1,200 people and the minimum loan balance at Tk3 crore, which was only Tk1 crore earlier. It has been said that if this target is not achieved by December 2026, the activities of the organizations concerned will be closed.

ADAB, the top coordinating organization of non-government development organizations, says that achieving this target in such a short time is not possible for most of the small NGOs. The organization fears that the activities of 300 to 350 small NGOs in the country may be closed due to this new condition.

ADAB's programme director Kawsar Alam Kanak said, "How will organizations that took one to two years to meet the condition of Tk1 crore, meet the condition of Tk3 crore in such a short time? Many organizations have not yet been able to repay their existing bank loans, so getting new loans is also uncertain. It is not possible to collect funds from individuals in the current economic situation."

He warned, "If rumours of closing organizations spread, the collection of funds at the field level will become uncertain, there will be a risk of large financial losses and unemployment of those involved in the sector will increase." He also opined that the government's policies should be supportive rather than restrictive.

An NGO founder, who did not want to be named, said, "This tough condition has been imposed to give exclusive benefits to a special group. If competition in the market decreases, the arbitrariness and customer harassment of large institutions will increase, and the rights of microfinance recipients will also be violated."

In this regard, ADAB Chairperson Anwar Hossain said that the regulatory body has postponed the implementation of this new decision in view of the requests of various stakeholders. A final decision has not been taken in this regard yet.

Apart from this, another decision has put microfinance institutions in trouble. The government is going to make a provision for the appointment of two independent directors in NGOs. Such a provision was not there before in the case of these institutions, which have been run through their own boards until now. According to MRA sources, the draft of the law and regulations containing the conditions for the appointment of independent directors is almost finalized. The draft mainly proposes to increase the power of MRA and control over microfinance providers.

Former caretaker government adviser Hossain Zillur Rahman told the media in this regard, "Such proposals have been made without understanding the real situation. This will further increase government interference in microfinance institutions and the normal working environment of the institutions may be destroyed."

Although the EVC of the regulatory body was called several times, no call was received.

MRA was formed according to the Microcredit Regulatory Authority Act, 2006 (MRA Act, 2006). The Governor of Bangladesh Bank serves as the chairman of the highest policy-making board of MRA. In addition, a deputy governor of Bangladesh Bank is a member of the board.

Since it was not possible to collect any statement from the MRA, when Views Bangladesh later contacted Bangladesh Bank Executive Director Arif Hossain Khan, he said that MRA is an independent institution. Any decision there is taken according to their policies. He said it was not possible for him to give any detailed statement on this issue at the moment.