Liquidity crisis hits credit flow

FT ONLINE

The recent liquidity crisis in private banks has created uncertainty in the credit flow in favour of the micro entrepreneurs, specially in agriculture and micro loans, a microfinance expert told a programme Saturday.

The liquidity crisis has not only hampered the expansion programme of the micro finance institutions but it has also become impossible to meet the demand of the micro finance borrowers.

However, eminent woman entrepreneur Rokia Afzal Rahman said that it is a lesson for the big banks that the MFIs are disbursing loans in rural areas with easy conditions, recovering hundred per cent loans from the poor borrowers and making profit. But non-performing loan (NPL) volume and defaulters are on the rise in big banks, she added.

On the other hand, environment minister Anisul Islam Mahmud said that despite growth, disparity has not increased in Bangladesh due to inclusive growth that was possible because of microcredit.

Their comments came at the 13th Citi Microentrepreneurship Awards (CMA) ceremony, sponsored by the Citi Foundation.

The awardees are-- Masuma Khanom, Md. Serajul Islam, Md. Selim Uddin, Khaleda Akhter, Mili Khatun, ZakiaAfrin, Sahinur Rahman, Shaheeda Khatun, Umma Shaila Rumki, Md. Saifullah Gazi, Beauty Begum, Shyamol Basu.

MAMATA received the 'Microfinance Institution of the Year' award.

Sagarika Samaj Unnayan Sangstha (SSUS) received the 'Innovative Microfinance Institution of the Year'.

Mr Anisul Islam Mahmud was present at the programme as the Chief Guest. Ms. Rokia Afzal Rahman, Managing Director, Airlinks Limited and Acting Chairperson of the 13th CMA Advisory Committee chaired the programme. Citi Foundation in collaboration with Sajida Foundation organised the event.

The distinguished guests presented a crest, cheque and certificate to each of the fourteen winners in six categories.

In his welcome speech, credit and development forum (CDF) executive director Abdul Awal said the micro finance sector is such a huge sector where transaction amount is Tk 1.6 trillion. There are 34.5 million borrowers of whom 3.6 million are micro entrepreneurs. A total of Tk 240 billion has been disbursed among these micro entrepreneurs.

Despite positive policy of Bangladesh Bank for jacking micro finance sector up, certain barriers are continuously hampering the sector.

The banks are not following the interest rate set by BB while there are many hidden cost of the fund they give to the MFIs, Mr Awal said.

The banks also do not approve loan without collateral or cash guarantee fund. The banks are also lingering the loan process, he added.

Rokia Afzal Rahman said the success stories of rural entrepreneurs are not reaching to people. Even Tk 5000 can bring a huge change in the life of a commoner.

She said the micro entrepreneurs are still being connected with global markets through middlemen as they do not have internet, wifi.

"I hope they will get access to the global markets in future as internet is now available in villages," she said.

Criticising the rising NPL volume and number of defaulters, she said poor borrowers are repaying loans to the MFIs and making them profitable while rich businesses are not paying billions of loans.

Anisul Islam Mahmud said NGOs played a vital role since independence and they are complementary to the government, not opponent.

Regarding the economic growth and contribution of microcredit, he said it is a common phenomenon that when there is growth there is the problem of inequality.

"Bangladesh has an inclusive growth, specially the inequality has decreased with the growth which is very rare. The main reason of that is inclusive growth through microcredit," he said.

The ministers' comment contradicts the concern of the policy experts, development and policy researchers, international and UN organisations and economists about the ever increasing inequality in Bangladesh. The GINI coefficient is now 0.47 which was 0.44 in 2013. In three years time, from 2013 to 2016, it has increased 0.3 which means inequality is rising in Bangladesh.

N Rajashekharan said in Bangladesh, the government, central bank, MRA, MFIs, NGOs and banks work together to develop entrepreneurship with a sense of integrated and absolute clarity about the purpose. Micro enterprises are the catalysts of this thriving economy.