MFTransparency Pricing Seminar in Bangladesh
MicroFinance Transparency’s Transparent Pricing Seminar in Bangladesh Yields Strong Government Support
Dhaka, Bangladesh (11 August 2009) – As lead presenter at the opening ceremony, MicroFinance Transparency advanced transparent pricing at a seminar organized by the Institute of Microfinance (InM) and the Microcredit Regulatory Authority (MRA). The event was attended by top regulatory authorities of the Bangladeshi microfinance industry, including finance minister Abul Maal Abdul Muhith.
Chuck Waterfield, Founder of MicroFinance Transparency, articulated the importance of transparency in microfinance and the leading role that Bangladesh is poised to play in this initiative. Waterfield pointed to the inaccurate and inconsistent reporting of the costs of loan products as a main prohibitive factor to transparency in the industry. He explained the potential for providing accurate pricing to lead to “efficiency, sound management decisions, and healthy consumer choice.” Citing the social mission of microfinance, Waterfield argued that the microfinance industry should spearhead efforts towards transparency in commercial finance as well. As “the country where microfinance was created and has grown so much,” he emphasized the need for Bangladesh to take the lead on this issue.
In his speech, Central Bank Governor Dr. Atiur Rahman elaborated on the ways that the government of Bangladesh could encourage transparent pricing in the microfinance industry. He advocated calculating the interest the microfinance institutions need to charge to be financially sustainable, explaining the factors that determine pricing in microfinance and how they must be understood differently from commercial lending. At the same time, he emphasized the importance of including microfinance in the broader regulatory framework for financial institutions, stating that, “there is no doubt that microcredit can contribute in a significant way to poverty reduction. However, the microcredit program has to be integrated with macroeconomic policies.” Rahman also identified a role for the government in encouraging innovation and efficiency to reduce operating costs and thereby enable MFIs to lower prices.
Finance Minister Abul Maal Abdul Muhith echoed the governor’s sentiments in saying, “microfinance institutions should maintain transparency in determining their interest rates and there should be a guideline in this respect.” By combining education on pricing, proposals to encourage transparency in the industry, and the dedication of government support, the seminar was a major step forward in furthering a sustainable, efficient, and socially conscious microfinance market in Bangladesh.
In the press:
MFIs should be transparent in fixing lending rates: Muhith – Financial Express
Bank rates lack transparency – South Asian Media Net