Rehman Sobhan pointed out that deinstitutionalization and non-uniformity of laws and regulations existed in the country's financial institutions
Micro and macro finance sectors should not be considered separate for the sake of uniformity of laws and regulations in the financial institutions of the country.
Eminent economist and Centre for Policy Dialogue (CPD) Chairperson Professor Rehman Sobhan said this on Saturday.
He was addressing as chair a discussion and launching of a book at Bangladesh National Museum in the capital.
The book “Institutionalising Microfinance in Bangladesh: Players, Games and Outcomes” is written by Lila Rashid.
Rehman Sobhan pointed out that deinstitutionalization and non-uniformity of laws and regulations existed in the country's financial institutions.
For example, he said, given that two people borrowed the same amount of loan from a bank, the two would be asked to repay the loan over varying periods of time.
One would be asked to repay it over five years while the other over 15 years (although interest rate was same), he said.
This variability in the payback period ultimately affected the amount of interest rate and undermined the credibility of the financial system, he said.
He called for the creation of a regulatory body at both micro and macro finance levels as the two sectors were inseparably linked.
Former governor of Bangladesh Bank Atiur Rahman, former professor of finance department of Dhaka University MA Baqui Khalily, DG of BIBM Md Akhtaruzzaman and chief executive officer of Sajida Foundation Zahida Fizza Kabir spoke on the book.
The event was moderated by the publisher of the book and managing director of University Press Limited (UPL) Mahrukh Mohiuddin.
Atiur Rahman said that the rural financial market of Bangladesh was now largely dominated by microfinance institutions, which brought about big changes in the last three decades.
The financial depth, including massive transaction via mobile financial services and activism of microfinance institutions, was conducive to this transformation, he said.
"Microfinance is good finance. We should extend big support to microfinance while the regulators should be more smart," he added.
MA Baqui Khalily suggested instituting a special bank for microfinance.
Zahida Fizza Kabir said that all stakeholders and regulators should work jointly to develop the microfinance system.
Lila Rashid said that this book attempted to understand the regulatory role of the government, its background and purpose, evolving characteristics, implementation procedures, and the role of state agencies like Bangladesh Bank and the new regulatory authority for NGO-MFIs, the Microcredit Regulatory Authority (MRA).