Financial sector experts have suggested that banks and MFIs together would pave a better way to achieve the goal of financial inclusion in Bangladesh.
Speakers expressed their opinion at a Brac Bank-organised webinar on the “impact of the Covid-19 pandemic on the microfinance industry” recently, reads a press release.
The webinar titled “Microfinance Institution Sector: Impact of Pandemic Challenges and Way Forward” brought together some of the top stakeholders of the MFI sector on a virtual platform on 18 August.
Dr Qazi Kholiquzzaman Ahmad, chairman of Palli Karma-Sahayak Foundation(PKSF), and Md Fashiullah, executive vice chairman of the Microcredit Regulatory Authority (MRA), joined the discussion as honorable guests.
Murshed Alam Sarker, executive director of People’s Oriented Program Implementation (POPI) and chairman of CDF; Dr Humaira Islam, executive director of Shakti Foundation for Disadvantage Women; Selim RF Hussain, managing director and CEO of Brac Bank; and Syed Abdul Momen, deputy managing director and Head of SME Banking of Brac Bank also participated in the webinar as panel speakers.
The speakers discussed the effect of Covid on the MFI industry, and also shed light on the challenges, and ways forward to ensure the sustainability of this sector. They all recommended that banks and MFIs should aim for more collaborations to elevate financial inclusion.
Humaira Islam, said, “Banks, as one of the prime sources of financing, should also consider the bottom of the pyramid of the MFI sector and create partnerships to help them recover from this situation”. She also said, “Regulatory authorities should redesign the pre-pandemic parameters to evaluate the MFIs, and guide them to maintain an efficient balance sheet.”
Murshed Alam Sarker said, “MFI ensures financial access for those whom banks can’t reach. MFIs are the bank of the extremely poor; hence they should be included under emergency services during challenging times such as a lockdown.”
Fashiullah appreciated that Brac Bank arranged the dialog as he believes that the MFI sector players will need more such dialogues to overcome the temporary loss they faced due to Covid.
He said, “The MFI sector is a major player in the country’s economy, with a transaction volume of around Tk150,000 crore a year. Banks contribute around 20 per cent in this sector, and I must say that it is enormous! However, we must also focus on digitization as it will be a key solution to MFI financing issues.”
He added, “Our job is to stand by the marginalized people at any time. If we can work with the interests of MFIs, then the interests of our people will be protected.”
Selim RF Hussain said, “We would also emphasize a partnership between the banking and MFI sector. I’m happy to inform you that Brac Bank is the largest collateral-free financier in the country, and around 52% of our customers belong to the small and medium sector. We are already working with some MFIs of various sizes and we will be happy to extend our collaborations. We look forward to bridging the gap between the two most prominent sectors.”
Qazi Kholiquzzaman Ahmad emphasised that SMEs and CMEs should be differentiated and not grouped under CMSME as their needs and models are different. He said, “Our regulatory authorities have to be realistic to be able to move in the right direction in policymaking. MFIs are the only institutions that can reach the small family economies. Development does not refer to economic development only; capacity development is also a big part of development. It requires adequate education, healthcare support, and training for people. Social development and economic progress must go hand in hand. We must have unity, strengthen our partnerships so that we can all reach our goals of financial inclusion.”
