Civil society urges withdrawal of Microcredit Bank Ordinance 2025

Civil society representatives on Tuesday called for the immediate withdrawal of the proposed Microcredit Bank Ordinance 2025, warning that bringing microfinance institutions under a banking framework would risk corporate encroachment and undermine the sector’s core mission.

The demands were raised at a press conference titled “Risks of Transforming Microcredit into a Banking Framework”, held at the National Press Club in Dhaka and organized by COAST Foundation, EquityBD, and the BDCSO Process.

Speakers argued that the ordinance could dismantle the microfinance sector under the guise of regulatory reform. They questioned the feasibility of such a move, noting that Bangladesh Bank already faces challenges managing the country’s 67 banks. Bringing hundreds of NGOs and microfinance institutions under the same framework, they said, would further strain regulatory capacity.

They also pointed out that the ordinance is among 16 introduced by the previous interim government and currently kept in abeyance for review.

Instead of restructuring the sector, speakers urged the government to strengthen microfinance institutions by expanding savings opportunities and enabling legal measures, such as certificate cases under the Public Demand Recovery Act, to prevent fund misappropriation. They emphasized that oversight should remain with existing bodies like the Microcredit Regulatory Authority (MRA), Palli Karma-Sahayak Foundation (PKSF), and the NGO Affairs Bureau, rather than being transferred to Bangladesh Bank.

Rezaul Karim Chowdhury, Executive Director of COAST Foundation, said development should focus on empowering people and ensuring secure livelihoods, not merely expanding banking systems. He highlighted that microfinance institutions maintain significantly lower non-performing loan rates compared to commercial banks and have played a key role in women’s empowerment and rural economic growth.

Syed Aminul Haque, Director of Microfinance at COAST Foundation, questioned the rationale behind introducing a new banking framework when dozens of banks already operate in the country. He warned that profit-driven motives and political influence within bank boards could pose risks if applied to the microfinance sector.

Presenting the keynote paper, Mostafa Kamal Akand of the BDCSO Process cautioned that transforming microcredit into a banking model could compromise its primary goal of poverty alleviation and social development. He also noted that regulatory complexities could reduce accessibility for marginalized communities.

Omar Faruk Bhuiyan, Coordinator of EquityBD, said the microfinance sector contributes around 17 percent to the national GDP, with daily transactions reaching approximately BDT 44,000 crore. He added that the sector employs about 500,000 people and operates largely on a self-sustaining basis.

M. A. Hasan of the BDCSO Process stressed that microcredit programs extend beyond financial services, supporting education, healthcare, and climate resilience initiatives. He warned that these social dimensions could be weakened under a banking framework.

Speakers collectively called on the government to scrap the proposed ordinance and pursue reforms that strengthen, rather than restructure, the country’s microfinance ecosystem.