Atiur for suitable disaster-risk reduction products for MFIs
He says MFIs need to frame effective disaster risk reduction strategy
Dhaka, May 24 (UNB) - Bangladesh Bank governor Dr Atiur Rahman on Thursday said initiatives are desperately needed to identify suitable disaster-risk reduction products and services which would help MFIs mainstream disaster-risk reduction strategies in the country.
“Psychologically, microfinance borrowers face shocking experiences during disasters and the loan loss is even more traumatic for them due to disruption in market mechanisms,” he told a validation workshop at Hotel Ruposhi Bangla in the city.
Comprehensive Disaster Management Programme (CDMP), Disaster Management and Relief Division of the Ministry of Food and Disaster Management organised the workshop on ‘Disaster Risk Reduction Products and Strategies for Microfinance Sector in Bangladesh.’
Representatives from different MFIs (microfinance institutions) and government bodies were present.
Speaking as the chief guest Atiur said there are no unified principles and guidelines in managing disaster management funds created by several big, medium and small MFIs.
“We’ve learned that the initiative for the formation of Disaster Management Fund got a momentum. PKSF has mobilised Tk 400 crore and its partner organisations mobilised generous amounts as well. Besides, several big, medium and small MFIs also created disaster management fund,” he said.
The central bank governor said a common fund can be mobilised through a network of apex organisation, government, donors and respective organisations.
He said all development actors are directly or indirectly vulnerable to disasters and a disaster might damage the progress that has been achieved through lots of efforts, resources and initiatives.
“Therefore, all development actors, either in the government or non-government sectors, need to have an effective disaster risk reduction strategy which is mutually supportive,” he added.
Atiur said the MFIs need to frame an effective disaster risk reduction strategy to sustain their development efforts for themselves and their clients. “A comprehensive pre-disaster planning of MFIs may significantly help reduce vulnerabilities through planned actions.”
Bangladesh is one of the most disaster prone countries in the world. Life and livelihood of microfinance sector are affected by disasters. Disaster, vulnerability, poverty and microfinance sector therefore have the synergy effects.
He mentioned that currently there is no acceptable standard product that could work as safeguard for microfinance sector during disaster. Besides, microfinance industry faces dilemma during disaster in the sense that neither MFIs can write off loans nor can recover loans after any disaster, rather faces severe challenges in loan recovery.
He said they are striving to achieve the balance of ensuring that microfinance institutions have the space to innovate while maintaining the oversight of poor people’s money.
Atiur said the central bank has developed guidelines to ensure a level-playing field for mobile banking which will be a key component to achieve financial inclusion targets.
“We’ll remain committed to maintaining a stable macro environment and a regulatory environment safeguarding people’s money while ensuring that microfinance institutions have the flexibility to develop financial products to suit poor people’s needs.”
“Psychologically, microfinance borrowers face shocking experiences during disasters and the loan loss is even more traumatic for them due to disruption in market mechanisms,” he told a validation workshop at Hotel Ruposhi Bangla in the city.
Comprehensive Disaster Management Programme (CDMP), Disaster Management and Relief Division of the Ministry of Food and Disaster Management organised the workshop on ‘Disaster Risk Reduction Products and Strategies for Microfinance Sector in Bangladesh.’
Representatives from different MFIs (microfinance institutions) and government bodies were present.
Speaking as the chief guest Atiur said there are no unified principles and guidelines in managing disaster management funds created by several big, medium and small MFIs.
“We’ve learned that the initiative for the formation of Disaster Management Fund got a momentum. PKSF has mobilised Tk 400 crore and its partner organisations mobilised generous amounts as well. Besides, several big, medium and small MFIs also created disaster management fund,” he said.
The central bank governor said a common fund can be mobilised through a network of apex organisation, government, donors and respective organisations.
He said all development actors are directly or indirectly vulnerable to disasters and a disaster might damage the progress that has been achieved through lots of efforts, resources and initiatives.
“Therefore, all development actors, either in the government or non-government sectors, need to have an effective disaster risk reduction strategy which is mutually supportive,” he added.
Atiur said the MFIs need to frame an effective disaster risk reduction strategy to sustain their development efforts for themselves and their clients. “A comprehensive pre-disaster planning of MFIs may significantly help reduce vulnerabilities through planned actions.”
Bangladesh is one of the most disaster prone countries in the world. Life and livelihood of microfinance sector are affected by disasters. Disaster, vulnerability, poverty and microfinance sector therefore have the synergy effects.
He mentioned that currently there is no acceptable standard product that could work as safeguard for microfinance sector during disaster. Besides, microfinance industry faces dilemma during disaster in the sense that neither MFIs can write off loans nor can recover loans after any disaster, rather faces severe challenges in loan recovery.
He said they are striving to achieve the balance of ensuring that microfinance institutions have the space to innovate while maintaining the oversight of poor people’s money.
Atiur said the central bank has developed guidelines to ensure a level-playing field for mobile banking which will be a key component to achieve financial inclusion targets.
“We’ll remain committed to maintaining a stable macro environment and a regulatory environment safeguarding people’s money while ensuring that microfinance institutions have the flexibility to develop financial products to suit poor people’s needs.”
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