Also discussed the effect of Covid-19 on the MFI industry, and also shed light on the challenges
Financial sector experts suggested that banks and microfinance institutes (MFIs) together would pave a better way to achieve the goal of financial inclusion in Bangladesh.
They made this remark at a webinar organized by Brac Bank, titled "Impact of the Covid-19 Pandemic on the Microfinance Industry” recently, said a press release.
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 guests.
Murshed Alam Sarker, executive director of People's Oriented Program Implementation (POPI) and chairman of CDF; 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-19 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 collaboration to elevate financial inclusion.
Qazi Kholiquzzaman Ahmad emphasized that SMEs and CMEs should be differentiated and not grouped under CMSME as their needs and models are different.
"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," he added.
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% in this sector, said CDF chairman Md Fashiullah.
"However, we must also focus on digitization as it will be a key solution to MFI financing issues," he added.
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, said Humaira Islam.
Regulatory authorities should redesign the pre-pandemic parameters to evaluate the MFIs, and guide them to maintain an efficient balance sheet, she added.
MFIs are the bank of the extremely poor; hence they should be included under emergency services during challenging times such as a lockdown, said Murshed Alam Sarker.
"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," said its MD Selim RF Hussain.