As high as 83.9 per cent of Microfinance Institutions (MIs) in the country faced reduced income or loss in business due to the Covid-19 pandemic in the country, according to a new study.
Also, 40 per cent of the respondents mentioned no work or loss of jobs, while 22 per cent of respondents said they were unable to pay loan instalments on time, according to the study by International Network of Alternative Financial Institutions (INAFI) Bangladesh.
Meanwhile, 21.3 per cent of respondents mentioned they were adversely affected as prices of daily essentials increased, it added.
The global network of development practitioners INAFI conducted the study to understand the challenges the MFIs and their clients faced during the pandemic and the coping mechanism they adopted to fight the situation.
INAFI held a report-sharing seminar on Saturday at BRAC Centre Inn in Dhaka. Mahbuba Haque, executive director of INAFI Bangladesh inaugurated the event. In her speech, she shed light on the aims and activities of INAFI Bangladesh.
Some of the main coping mechanisms mentioned by the respondents were taking loans, withdrawing or using savings, reducing expenditure, selling or mortgaging assets and receiving assistance among others.
Most respondents in the lower income range said about taking loans and most respondents in the higher income range said about using or withdrawing savings for coping with the financial crisis during Covid-19.
Major challenges mentioned by the MFIs include on-time loan realisation as clients faced losses of income; frontline staff faced obstacles during branch visits (especially in rural areas) from the local administration and social community.
The crisis in staff management prevailed as some MFIs struggled to pay full salary and bonuses on time, some experienced unusually high staff turnover and some mentioned the vulnerable state of staffs’ mental health.
The study suggested exploring possible cost-sharing mechanisms for offering DFS to MFI clients. The concerned regulators can form a unique policy to bring about 30 million clients under the coverage of DFS.
Providing mental health support for MFIs’ staff members, the suggestions added.
Md. Fashiullah, executive vice chairman, MRA, shed light on the amendments the institution has already made regarding making the savings accumulation flexible for the MFIs, as well as some additional amendments in a few other areas which are yet to be published.
Sheikh Mohammad Salim Ullah, secretary, Financial Institutions Division, Ministry of Finance, addressed the event as the chief guest.
He focused on how fast Bangladesh has been able to come out of the danger of Covid-19.
Mr Ullah stated that research should be undertaken to find if there is any gap between the condition of the group of people who benefited from the stimulus package of the government and those who did not.
SN Kairy, chairperson, INAFI Bangladesh, was the chair of the seminar.
