Institutionalising Microfinance in Bangladesh: Players, Games & Outcomes

The rural financial market of Bangladesh is now largely dominated by microfinance institutions and has changed dramatically in the last three decades. In 1983, the Bangladesh government provided regulatory support to Grameen Bank, the first microfinance bank in the country. With the formation of the Microcredit Regulatory Authority or MRA, it responded to another regulatory need for NGO microfinance activities (NGO-MFIs) in 2006, twenty-three years after its first response to Grameen. These two sets of regulations, their followup amendments, and other supplementary rules have had an immense impact in institutionalising microfinance in Bangladesh.This book attempts 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, the central bank of Bangladesh and the new regulatory authority for NGO-MFIs, the MRA. In doing so, this book takes an institutional approach, and uses a basic IAD (Institutional Analysis and Development) framework to analyse historical data. The data gathered is in the form of documents, interviews, focus group discussions, and surveys. The work shows that the regulatory response of the state is primarily driven by the government's political views, and regulating agencies have had little independent role in the evolution of microfinance institutions in Bangladesh.