Regulator unwilling to handle microcredit cooperatives

Expressing its reluctance to shoulder any responsibility to regulate the cooperative societies that provide microcredit, the Micro Credit Regulatory Authority (MCRA) has demanded that the government exempt it from discharging this duty.
It says its existing manpower is too inadequate to handle thousands of cooperatives that mushroomed across the country during the last several years.
“We have written to the government seeking an amendment to the Microcredit Regulatory Authority Act 2006 so that we relieved of the responsibility to discipline the cooperatives engaged in micro-lending,” a senior MCRA official told The Daily Star.
The law was enacted to establish an authority and formulate rules for the efficient regulation of microcredit programmes and ensuring transparency and accountability in the activities of microcredit organisations operating in Bangladesh. Accordingly, the MCRA has been set up with a Bangladesh Bank executive director as its head and a few other officials.
As in December 2007, there are 154,000 cooperative organisations in the country, according to data received from the Office of the Registrar of Cooperatives. About 82 lakh individuals are registered members of these organisations.
The cooperatives department and the social welfare department usually register microcredit providing cooperatives.
These cooperatives, with a capital base of Tk 1,000 crore, have already mobilised a fund of Tk 1,200 crore for investment.
They offer microcredit to individuals in a way similar to the procedure nongovernmental organisations (NGOs) follow in such lending. The credit ceiling of these cooperatives hovers between Tk 500 and Tk 200,000.
Asked, the MCRA official said: “The government is yet to respond to our letter seeking an exemption from regulating the microcredit providing cooperative agencies.”
The MCRA has so far issued microcredit licences to only 365 NGOs and another 100 to be given by January 2009, although there are thousands of NGOs engaged in microcredit activities.
Meanwhile, a senior official in the Registrar of Cooperatives said micro credit cooperative agencies should not be run by the new act.
“We think the new act is detrimental to the cooperative agencies that run micro credit programmes in a traditional way for years,” he said.
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