A new study on microfinance institutions (MFIs) says 83.9 per cent respondents faced reduced income or loss in business due to the Covid-19 pandemic in Bangladesh.
Forty per cent microfinance recipients of the respondents cited loss of jobs and 22 per cent were unable to pay loan instalments on time.
The study of the International Network of Alternative Financial Institutions (INAFI) Bangladesh made disclosures on Saturday.
Meanwhile, 21.3 per cent of all respondents mentioned that they were adversely affected as prices of daily essential commodities increased, it said.
INAFI, a network of development practitioners,
conducted the small-scale study to understand the challenges faced by the MFIs and their clients during the pandemic and the coping mechanism they adopted to fight with the situation.
INAFI Bangladesh executive director Mahbuba Haque inaugurated the report-sharing seminar at BRAC Centre Inn in Dhaka.
She shed light on the aims and activities of the organisation in Bangladesh.
Some of the main coping mechanisms mentioned by the respondents include taking loans (from any source), withdrawing or using savings, reducing expenditure, selling or mortgaging assets and receiving assistance.
The respondents in the lower-income range mostly talked about taking loans and those in the higher-income range about using or withdrawing their savings for coping with the crisis.
Major challenges mentioned by the MFIs include on-time loan realisation as clients faced loss of income.
Even frontline staff faced obstacles during branch visit (especially in rural areas) from the local administration and social community.
Many faced difficulty in institutional fund management as income decreased and a crisis in staff management as some struggled to pay full salary and bonus on time.
Some MFIs experienced an unusually high staff turnover and some mentioned vulnerable state of staff members' mental health.
The study suggested exploring possible cost-sharing mechanisms for offering DFS (digital financial service) to MFI clients.
The regulators concerned can form a unique policy to bring about 30-million clients under the DFS coverage.
It further suggested providing mental health support for staff members of the MFIs.
Microcredit Regulatory Authority (MRA) executive vice-chairman Md Fashiullah highlighted the amendments the MRA has made regarding flexibility of savings accumulation for the MFIs and some additional amendments in a few other areas.
However, the amendments are yet to be published.
Financial Institutions Division secretary Sheikh Mohammad Salim Ullah addressed the event as the chief guest.
He focused on a way out for Bangladesh in order to come out of the danger of Covid-19 faster.
Mr Salim suggested that research be done to find any gap between the state of the people who benefited from the government's stimulus package and those who did not.
INAFI Bangladesh chairperson SN Kairy chaired the seminar.
