The NGO-MFI in Bangladesh: The Issue of Ownership and Governance

The paper examines the outreach, impact, and sustainability of different types of NGO-MFIs in Bangladesh. It also develops a set of optimum criteria of ownership and governance for this sector.

To be considered successful, MFIs must fulfil the criteria of outreach, impact, and sustainability. In Bangladesh, cooperatives, credit unions, community-based organizations, and self-help groups have limited outreach. Grameen Bank has succeeded in terms of all the three criteria of an ideal MFI. Some NGO-MFIs are successful with respect to all three dimensions, while some have failed miserably.

Bangladesh needs a certification process to identify NGOs that are really oriented towards delivering financial services to the poor. The paper suggests that:

• Poor borrowers should become shareholders of microcredit banks in order to maintain their social nature;
• New laws should establish a fully fledged regulatory authority to monitor and control microcredit banks;
• Micro Credit Regulatory Authority needs to make and publish a comprehensive multi-dimensional credit rating of all licensed NGO-MFIs.