Impact of MRA’s Rules & Regulations: Institutional & Users’ Perspectives

Impact of MRAInstitute of Microfinance (InM) and Microcredit Regulatory Authority (MRA) jointly organised a Seminar entitled “Impact of MRA’s Rules & Regulations: Institutional & Users’ Perspectives” at CIRDAP Auditorium, Dhaka on 3 April 2013. The seminar was aimed at addressing and discussing the findings from two research studies conducted by InM on the impact and effectiveness of MRA regulations in the microfinance sector.

Dr. Atiur Rahman, Governor, Bangladesh Bank and Chairman, MRA, graced the event as the Chief Guest, and the seminar was chaired by Dr.Qazi Kholiquzzaman Ahmad, Chairman, InM and PKSF. Mr. Khandakar Muzharul Haque, Executive Vice-Chairman, MRA, welcomed the participants to the seminar.

As the keynote speaker, Professor M. A. Baqui Khalily, Executive Director, InM gave a presentation titled “Regulatory Compliance and Impact of Regulation on Cost Efficiency of MFIs in Bangladesh”. The presentation was based on the InM research studies named “Impact of Regulation on the cost Efficiency of Microfinance Institutions in Bangladesh” and “Effectiveness of MRA Regulations in the Microfinance Sector: The User Perspective”.

Dr. Hassan Zaman, Chief Economist, Bangladesh Bank, Professor M. M. Akash, Department of Economics, University of Dhaka, and Dr. Mahabub Hossain, Executive Director, BRAC, were present as discussants in the seminar.

The major findings of the studies revealed that most MFIs have been complying with the rules of MRA. Therefore, the study observed desired positive outcomes—that were intended while formulating the rules—among MFIs and their beneficiaries, such as lowered interest rates and relaxed instalment terms. Nonetheless, MRA should focus more on disseminating its regulatory system to the end beneficiaries of microfinance.

The studies also found that regulation by MRA is justified because it is improving the cost efficiency of MFIs over the regulated years through enhancing productivity. However, better familiarity with regulatory measures, as is evident by PKSF partner organisations, yield better result. Hence, MRA should provide MFIs with essential training, and MRA can also think about facilitating convenient finance for some MFIs as they face contraction in the fund and therefore might converge to commercialisation.

At the open floor (question-answer) discussion session, various queries and suggestions came up from the participants, and Professor Khalily replied to the questions and clarified the outcomes of the research studies. The Chief Guest Dr. Atiur Rahman, in his speech, thanked Professor Khalily for such rich analysis and presentation, and also thanked InM for conducting the contemporary studies which have policy implications to the microfinance and development.

The Chair of the seminar, Dr. Qazi Kholiquzzaman Ahmad, expected that the findings of such studies would help policymakers understand the reality regarding impact and effectiveness of MRA rules and regulations for improving the efficiency and also for capacity building of the MFIs in Bangladesh. The seminar became lively by the active participation of microfinance stakeholders, practitioners, academicians, researchers, policymakers, and other eminent personnel from reputed institutions and organisations.

The Institute for Inclusive Finance and Development (InM) is registered as an independent non-profit institution under the Societies Registration Act 1860.
The Institute works for developing the overall capacity of the financial sector and strengthening the links between the financial and real sectors through undertaking research, training, education, knowledge management and other programmes in priority areas including inclusive finance, microfinance, poverty and development.

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