Civil Society demands at the press conference Scrap Microcredit Bank Ordinance-2025

Bringing microfinance institutions under a banking framework in the name of regulation would amount to corporate encroachment and cannot be accepted. The interim governments proposed Microcredit Bank Ordinance2025 must be withdrawn immediately. Speakers alleged that the ordinance represents a clear blueprint to dismantle the microfinance sector under the guise of banking reform. They further questioned the feasibility of such a move, noting that even managing the countrys existing 67 banks poses significant challenges for Bangladesh Bank.

In that context, they asked how it would be possible to effectively regulate and oversee hundreds of NGOs and microfinance institutions if they were brought under the same banking system. It is noteworthy that among the 16 ordinances promulgated by the interim government, which the current government has kept in abeyance to further strengthen them, the Microcredit Bank Ordinance2025 is among them.

They further stated that, instead of creating risks through the ordinance, initiatives should be taken to strengthen microfinance institutions financially by expanding opportunities for savings. At the same time, provisions should be made to allow the filing of certificate cases under the Public Demand Recovery Act-91 to prevent the misappropriation of funds.

They also emphasized that regulatory oversight of the microfinance sector should not be transferred to the Bangladesh Bank. Rather, existing institutions such as the Microcredit Regulatory Authority (MRA), Palli Karma-Sahayak Foundation (PKSF), and the NGO Affairs Bureau should be further strengthened and allowed to operate within their respective mandates. 

On Tuesday, 7 April 2025, the demands were raised at a press conference titled “Risks of Transforming Microcredit into a Banking Framework”, held at the VIP Lounge of the National Press Club in Dhaka. COAST Foundation, EquityBD, and the BDCSO Process organized the event.

The press conference was chaired by Rezaul Karim Chowdhury, Executive Director of COAST Foundation and Chief Moderator of EquityBD. Among the speakers were Syed Aminul Haque, Director of Microfinance at COAST Foundation; Omar Faruk Bhuiyan, Coordinator of EquityBD; and M. A. Hasan of the BDCSO Process, along with others. The keynote paper was presented by Mostafa Kamal Akand of the BDCSO Process.

Rezaul Karim Chowdhury stated that development is not merely about infrastructure or increasing bank balances; true development lies in empowering people, establishing self-respect, and ensuring secure livelihoods.

He questioned whether banks could access foreign funds the way NGOs do for health, education, or climate-related disaster programs. Moreover, while commercial banks in Bangladesh have an NPL of around 35%, microfinance institutions maintain an NPL of only 89% at most. There is no record of microfinance funds being siphoned abroad. In fact, banks now consider investing in microfinance institutions to be one of the safest options.

He emphasized microfinance sector has strengthened the self-reliance of millions and empowered women, while energizing the rural economy. 

Syed Aminul Haque said, Bangladesh already has 67 banks, so the question arises: why is there a need to bring microfinance institutions under the banking framework? Banks are primarily profit-driven and operate under the political influence of their boards, which could pose significant risks in the future. Around 700 NGOs are operating in the country, yet the previous interim government drafted this ordinance without consulting anyone or seeking broader opinions, relying instead on the advice of just a few large NGOs and corporate entities. We demand that this ordinance be repealed immediately.

Mostofa Kamal Akand noted that the core objective of microcreditpoverty alleviation and social developmentcould be compromised if it is transformed into a profit-driven banking model, potentially leaving marginalized communities underserved.

He further warned that banking regulations and procedural complexities might hinder the timely and accessible delivery of services. Additionally, he emphasized that NGOs critical work in education, health, and climate risk mitigation could lose prominence under a banking framework, negatively affecting rural development.

Omour Faruq Bhuyian, Coordinator of EquityBD, noted that over the past three decades, microfinance institutions have largely operated self-sustainably without relying on foreign funding. The sector contributes approximately 17 percent to the countrys GDP. Daily transactions amount to around BDT 44,000 crore, of which nearly 40 percent comes from group members savings. Approximately 500,000 people are employed in this sector.

He warned that such a large and vital sector must not be handed over to a small number of large NGOs or corporate entities.

M. A. Hasan stated microcredit programs run through NGOs are not limited to providing loans; they are deeply integrated with various social development initiatives, including education, health, and climate-related disaster management.

He warned that if these programs are transformed into a banking framework, these humanitarian and social initiatives could lose their significance, which would negatively impact overall development in rural communities.