Banks, MFIs should achieve financial inclusion together: analysts at Brac Bank webinar

Banks and Micro Finance Institutions (MFIs) should pave a better way to achieve the goal of financial inclusion in Bangladesh, speakers said at a webinar.

BRAC Bank organised the webinar styled "Microfinance Institution Sector: Impact of Pandemic Challenges and Way Forward" last week.

Qazi Kholiquzzaman Ahmad, chairman of Palli Karma-Sahayak Foundation (PKSF), and Md Fashiullah, Executive Vice Chairman of the Microcredit Regulatory Authority (MRA), took part in the discussion as honourable guests.

The speakers discussed the effect of Covid-19 on the MFI industry, and also shaded lights on the challenges, and ways forward to ensure the sustainability of this sector.

They recommended that banks and MFIs should aim for more collaborations to elevate financial inclusion.

Humaira Islam, executive director of Shakti Foundation 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."

"Regulatory authorities should redesign the pre-pandemic parameters to evaluate the MFIs, and guide them to maintain an efficient balance sheet," she also said.  

Murshed Alam Sarker, executive director of People's Oriented Program Implementation (POPI), 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."

Selim RF Hussain, managing director and CEO of BRAC Bank said, "We would also emphasize a partnership between the banking and MFI sector. BRAC Bank is the largest collateral-free financier in the country, and around 52 per cent 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 emphasized 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 in hand. We must have unity, strengthen our partnerships so that we can all reach our goals of financial inclusion."

Syed Abdul Momen, deputy managing director and head of SME Banking of BRAC Bank, also participated in the webinar as panel speaker.