Chief Advisor Professor Muhammad Yunus has called on microcredit to move away from the concept of NGO and adopt the concept of banking to serve the borrowers.
He said this while inaugurating the new building of the Microcredit Regulatory Authority (MRA) in Agargaon, the capital, on Saturday (May 17, 2025).
The Chief Advisor said, “Microcredit is still an NGO. It has to transition from this NGO. If it remains at the NGO level, banking will not come into the mood. It has to come into the mood, it has to become a bank. A separate law should be made for microcredit.”
Reminiscing about the beginning of Grameen Bank, Professor Yunus said, “When we started Grameen Bank, there was an objection whether it could be called a bank or not. We said, “Ours is a real bank, yours is a sham. The word bank is derived from trust, what you are doing is distrust.” Our banking is based on people. Banks without collateral, we give money on the basis of trust.
‘Today we are talking at a time when many of the collateral banks, who used to consider themselves real banks, are now nothing. They are looting money. Banks are gone. And look at the statistics of microcredit. No one has run away with money. This is a joke,’ he said.
Microcredit is the future of banking, the chief advisor said, ‘This is real banking, the banking of the future in which people will work on their own identity, banking will be based on their own beliefs, not on money.’
The chief advisor shared his experience on the need for a regulatory authority for microcredit. He said, ‘After the success of Grameen Bank, every NGO tried to do something similar. It gradually started expanding. They started introducing various new things and ideas for their own benefit. They thought it would be bad for the future and needed a regulatory authority. I contacted Bangladesh Bank, they said, “It’s not our job.” The Ministry of Finance initially didn’t take it seriously, but later said, “Well, tell us what to do.” Then we said, there needs to be a regulatory authority because at the rate it is growing, there could be big problems.”
“The then Governor Fakhruddin supported us. But it can’t happen under Bangladesh Bank. They asked for an explanation. I said, I have said this in many countries, and I still say it, Grameen Bank is also a bank, other banks are also banks. But there are many differences. For example, American football is also football. European football is also football. But the game is different. If you want to run an American football game with a European football referee, it will be a disaster. You control microfinance with a central bank, it doesn’t know microfinance. He is the referee of European football,’ the chief advisor said.
‘Finally, Fakhruddin agreed. He also had to be persuaded to have the governor run it. There was a discussion about setting up an office within Bangladesh Bank. We said, the office should be in a separate place… Today, a new building has been built. Bangladesh Bank officials have tried to understand it, made rules and regulations. If they had set it up on the regulatory rules of other banks, microcredit would have ended that day and would not have been found. I congratulate the Bangladesh Bank officials.’
The chief advisor said that not only Bangladesh, but every country where microcredit has been implemented has faced problems regarding who the regulatory authority will be.
‘I have told them time and again that you don’t have to worry so much because Bangladesh has provided a solution. The Microcredit Regulatory Authority has not only worked for Bangladesh but has also been helpful to many countries internationally,’ he said.
Financial Advisor Saleh Uddin Ahmed said, ‘The law should be made in such a way that there is user-friendly regulation without being strict on the regulator, so that nothing is imposed. The MRA will now have to look at promotional activities along with regulation. Pay attention to making the return of savings, service charges easy. Make it easy for the beneficiaries.’
Bangladesh Bank Governor Ahsan H. Mansur said in his speech, ‘Microcredit has come a long way today. Currently, the microcredit sector has assets equivalent to 10 percent of the banking sector. The most important thing is that microcredit is in a strong position in the areas where there are weaknesses in the banking sector. Members’ savings have increased to over 68,000 crore taka, and the accumulated surplus has increased to over 61,000 crore taka. This is a big achievement. They are building themselves with their own savings and surplus. There is no foreign aid or grants. Donor funds are about 3,000 crore taka. This is very insignificant.’
‘The rural economy is growing in Bangladesh. Agent banking is spreading. There are about 26,000 microcredit branches. Agent banking branches have crossed 20,000. A healthy competition has started here. The formal sector is increasing in the rural economy and will increase. Microfinance institutions will have to face this challenge and survive. The regulatory authority and Bangladesh Bank will work together to make microcredit more functional,’ he said.
A new law has been drafted on microcredit regulation. It will be brought to the government soon, said Bangladesh Bank Governor Ahsan H. Mansur.
Among others, Special Assistant to the Chief Advisor Dr. M Anisuzzaman Chowdhury was present at the event.
