"We have rules, regulations and procedures on microfinance. But we do not have a policy," said M Amanullah Khan, team leader of Prosper, a DFID-funded microfinance project in Bangladesh. “We need a policy that will cover insurance, healthcare, savings and money transfers.”
"Unless we have a clearly defined national microfinance policy, our responses to delivering or scaling up low-income financial services will continue to be knee-jerk and piecemeal,” Khan said.
"It is still not late for the government to devise a national policy for microfinance for financial inclusion, a policy that is holistic, futuristic and yet practical,” he said.
Khan spoke at a seminar, “Towards a public policy on microfinance in Bangladesh” co-organised by the Institute of Microfinance (InM) and Policy Research Institute of Bangladesh (PRI) at the latter's office in Dhaka.
Microfinance must be recognised as a vital part of the financial system, dedicated to meet the financial needs of poor clients in a responsive and profitable manner, he said.
Microfinance institutions expanded in an unplanned way, without any definite policy from the government, he said. Nevertheless, several rules, regulations and institutions have tried to guide MFIs for consolidation and sustainability of the sector, he added.
Speaking as the chief guest, Atiur Rahman, governor of Bangladesh Bank, said macroeconomic policy may seem miles away from microfinance, but they are in fact interlinked.
"So irrespective of whether we have a policy on microfinance, the issue of macro-stability will have a profound impact on how the microfinance industry shapes up in future."
The governor however said he was not clear about whether Bangladesh needed a microfinance policy.
"We remain committed to maintaining a stable macro environment and a regulatory environment which safeguards people's money while ensuring that microfinance institutions have the flexibility to develop financial products to suit poor people's needs,” Rahman said. “I am not sure whether we need a microfinance policy to continue down this path.”