The Credit and Development Forum (CDF) has strongly rejected concerns raised by a group of non-governmental organisations (NGOs) over the proposed Microcredit Bank Ordinance, 2025, asserting that the initiative will not commercialise the microfinance sector and will operate strictly as a social business.
In a press release issued today (9 January), the national apex body of microfinance institutions described the proposed ordinance as a “landmark initiative,” countering claims by 17 NGOs that the new banking framework could dilute the sector’s core social mission.
Addressing allegations of a potential shift towards profit-making, the CDF said the draft ordinance clearly defines the proposed bank as a social business. Referring to Section 9 of the draft law, it said investors will only be entitled to recover their initial investment, with no scope for earning profits beyond that amount.
Under the proposed framework, dividends will be capped at the level of invested capital, while any surplus income will be reinvested to benefit members, it added.
“The claim that the establishment of a bank will inevitably lead to ‘mission drift’ is not supported by the provisions of the ordinance,” the CDF said.
The national association and network of microfinance institutions further highlighted the ownership structure of the proposed bank, stating that 60% of its shares will be held by poor members, ensuring that they remain the majority shareholders. The remaining 40% will be invested by NGOs, institutions or individuals using their own funds to support the bank’s social objectives.
As an example, it cited Grameen Bank, noting that around 90% of its shares are owned by borrowers, and that the institution has maintained financial sustainability for decades without abandoning its development mandate.
Clarifying regulatory concerns raised by critics, the CDF said the ordinance does not require all microfinance NGOs to transform into banks. Instead, it offers an optional route for institutional expansion. NGOs may choose to convert fully or transfer only selected branches to the proposed bank.
Any newly established bank will be regulated by Bangladesh Bank, while the original NGO will continue to fall under the oversight of the Microcredit Regulatory Authority (MRA), it said, adding that only the assets and liabilities linked to the converted operations would be transferred, not the organisation’s entire asset base.
The proposed bank will be authorised to accept public deposits, a move the association said would reduce microfinance institutions’ reliance on borrowing from commercial banks at comparatively high interest rates.
This is expected to expand credit availability for micro-enterprises, cottage industries and the agricultural sector. The bank would also be permitted to provide insurance and remittance services, as well as receive domestic and foreign grants or loans, it added.
While acknowledging that the 17 NGOs opposing the ordinance had described it as a positive policy initiative, the CDF said their concerns about the “profit-based nature” of banking were misplaced.
It mentioned that several signatories, including BRAC, have already established or engaged with commercial banking ventures, such as BRAC Bank or digital banking initiatives, without compromising their social development objectives.
The CDF expressed confidence that the proposed microcredit bank model would emerge as a global benchmark for poverty alleviation, distinguishing itself from profit-oriented microfinance laws seen in parts of Asia and Africa.
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