The microfinance institutions (MFIs) in Bangladesh are facing a cash flow crisis amid the deadly Covid-19 pandemic. And as time passes by and the situation gets worse, things aren’t looking too bright for the MFIs in the future too.
The MFIs did not collect loan installments from their clients for the last one and half months as the government halted nationwide operations.
Besides, the rural people – who make up the majority of the clientele of these institutions – did not get loans during that period despite a huge demand, said insider sources.
Most of the mid and small levels of NGO-MFIs are already facing hardships and difficulties in paying full salaries to their staff last month.
Under the situation, the Microcredit Regulatory Authority (MRA) issued a circular on Saturday instructing MFIs to operate on a limited scale until further notice.
During the limited operation, microfinance institutions can distribute relief, pay back deposits, and provide loans from the stimulus package of Tk3,000 crore following proper health safety measures.
But the MFIs’ representatives said some conditions mentioned in the MRA circular would be a hurdle against smooth operation.
Presently, there are 758 MRA certified MFIs across the country.
BRAC, which is one of the leading microfinance institutions, has around 60 lakhs members and 32,000 staff. The organization disbursed $5.09 billion in loans across Bangladesh last year – an increase of 21 percent from 2018.
So what to do in a situation like this? Southtech’s Ascend Financials is just the perfect solutions for MFIs currently if you are looking to sustain your MFI post-COVID-19 pandemic.
Here are a few benefits of AFS that can help your MFI in this time of crisis:
CASH MANAGEMENT
Allows users to buy and sell foreign currency as per the organization’s currency rate setup. This also generates collection and disbursement sheets and updates batch-wise data for Microfinance organizations. Processes cash and cheques deposits under a single transaction.
LOANS AND ADVANCES
Supports all types of term and continuous loans. Supports different repayment methods for term loans including one-time payment loans. Customize interest rates by variable or fixed interest rates for individual customers. Restructure and reschedule loans by customer or group
CUSTOMER INFORMATION
Allows setting up different types of contacts (e.g., guarantors and nominees) and customers (e.g. individual, partnership, group, and corporate customers). Creates a new field dynamically if necessary for KYC (Know Your Customer). Sets up customer management by branch, center, group and/or group member
PORTFOLIO TRANSFER
Branch reached the highest beneficiaries? For our competitors It takes a few months. In case of the smartest microfinance software in Bangladesh, just a click away!
In case of branch overload, increase or divide the scale and size of your MFI with smooth and easy data transmission. Transfer a large number of customers and their portfolio from one branch to another within minutes with this powerful solution.
REGULATORY BODY FRIENDLY
Our dynamic reporting tool of Ascend Financials lets MFI clients produce financial reports in various formats that are in alignment with every regulatory body. With our microfinance software, eliminate the need to manually prepare reports on Excel altogether and avoid the double work.
AGENT BANKING
Expand your outreach through our microfinance software in the absence of a brick and mortar infrastructure.
According to the Credit and Development Forum (CDF), a network of MFIs, microfinance institutions are directly supporting three crore families in Bangladesh, and it is contributing significantly to the GDP by employing 2.5 lakh staff members.
All these NGO-MFIs roll around Tk1.5 lakh crore in the rural economy, which is almost one-third of the country’s annual budget.
As Covid-19 infections accelerated in Bangladesh, businesses faced with falling demand and broken supply chains may find no option but to lay off workers. Employment in the non-farm and informal sector is just collapsing. That threatens to be destabilizing and chaotic. The government may avoid this by several mechanisms.
Given that government borrowings from banks have surged in recent years and liquidity crisis is prohibitive in our financial system, we expect no big room for budgetary supports like those of the United States and other developed countries. The best course of action appears to be that, Bangladesh Bank orchestrates a substantial monetary expansion targeting a repo rate of 4.0 percent and lending rate in the range of 5-8 percent.
In a situation like this, if you are planning to sustain your microfinance institute then investing in an all-round microfinance system like Ascend Financials can actually help you get through these tough times.
