Transformation of microfinance institutions is inevitable considering rural economic growth and financial inclusion requirements of Bangladesh where some 50 percent of the adult population remain unbanked, said discussants yesterday.
Microfinance institutions for decades have positively impacted financial inclusion, savings and lending, especially in remote areas, they added at a seminar on “Transforming the Microfinance Sector for Financial Deepening”.
The Business Finance for the Poor in Bangladesh (BFP-B) project organised the event at the Sonargaon hotel in Dhaka on completing a “Feasibility Study on Transformation of MFIs into Specialised Banks/Finance Companies: Bangladesh Perspective”.
The study’s primary objective was to understand whether the transformation of microfinance institutions can deepen financial inclusion in Bangladesh by addressing the financial needs of the unbanked people and businesses.
The study recommended that microfinance institutions could continue widening access to finance if new rules and acts were enacted and existing ones amended.
It also showed that large microfinance institutions might create pathways for a gradual transformation to specialised banks, resulting in an improved customer base and growth.
Bangladesh Bank and Microcredit Regulatory Authority are implementing the 6.5-year project, funded by DFID Bangladesh, while Financial Institutions Division the executing agency.
The project aims to improve access to finance for micro and small enterprises and create economic opportunities for small business.
This would be brought about by improvements in policy and regulation of financial services, innovations in the nature and scope of financial services targeting the poor and strengthening of information systems supporting microfinance and bank lending.
Md Ashadul Islam, senior secretary to Financial Institutions Division, was the seminar’s chief guest, and Ahmed Jamal, deputy governor of Bangladesh Bank and project leader, the special guest.
Arijit Chowdhury, additional secretary to Financial Institutions Division and chairman of the project’s policy working committee, moderated the discussion.