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I am pleased to know that "MRRU" is going to publish its second report on the activities of NGOMFIs for July-December 2005 period. This publication is based on the self-reporting systems of the Microfinance Institutions (MFIs); it provides valuable information on the activities of the sector. I believe
that this analytical report prepared by MRRU would provide useful insights for policy makers and other stakeholders.

I thank the members of the team of MRRU for their effort in publishing this second report. I believe that all concerned agencies and institutions will welcome this effort of MRRU and extend cooperation for sustainable development of the microfinance sector in Bangladesh. Until a regulatory body is created by law, I hope MRRU will play its active role for collecting and analyzing information of this sector.

Dr. Salehuddin Ahmed
Bangladesh Bank

The government of Bangladesh established "Microfinance Research and Reference Unit (MRRU)" in Bangladesh Bank to help formulate uniform policy guidelines for microfinance sector in the country. The Unit has published an operational guideline for monitoring management and financial system of microfinance institutions. It contains reporting formats, accounting manual, guideline for measuring performance and terms of references for internal and external audit. Based on this reporting format, MRRU requested NGO-MFIs to submit half-yearly information to the Unit. The Unit has
published its first report on NGO-MFIs in Bangladesh in December 2004. This is the second publication based on December 2005. It is a consolidated report on the basis of information provided by NGO-MFIs according to the given format. Till 20 March 2005 MRRU received reports from 582 NGO-MFIs for the period of July-December 2005. MRRU has a list of 900 NGO-MFIs who reported at least once to the Unit in the past.

All the information given in this report could not be verified at field level to ensure data reliability, however, a few of them were verified on sample basis. The first volume presented information of 352 NGO-MFIs. In the second volume the reports of 469 institutions among 582 were considered and analyzed, other reports were not provided according to the requirements of MRRU. This report contains year-end (December 2005) information of 469 MFIs, which includes all the big players of this market. From this publication individual MFIs would get information on their position in the overall market and also get information on their relative performance. This report would help MFIs to improve their
performance and capacity, to understand their abilities and limitations. It would also provide valuable insights to the policy makers to formulate policies for this sector.

This report could not provide valuable analysis on the financial performance of this sector as expected due to inconsistencies in basic data. However, the Unit has developed an accounting manual that would help NGO-MFIs to prepare their financial reports in a uniform way. The Unit is also arranging training to build up their capacity to produce financial reports according to the requirements. Therefore, it is expected that in near future NGO-MFIs will be able to produce their financial reports such as income and expenditure statements, balance sheet, etc. according to the prescribed formats and that will help the unit to generate valuable financial information at industry level.

A draft law to bring this sector under a regulatory framework has already been submitted to the government for consideration, which is expected to be passed by the parliament very soon. Therefore, it can be said that after the promulgation of the law microfinance sector in Bangladesh will be under a formal regulatory framework in near future.

Khandakar Mazharul Haque
Executive Director
Bangladesh Bank

Published by Microfinance Research and Reference Unit (MRRU)
1st Annex Building, 1st Floor, Bangladesh Bank
Head Office, Dhaka
Phone: 88-02-7125740, 88-02-7125632,
Fax: 88-02-9564117, E-mail:,
Printed by : Srout Advertising, Moghbazar, Dhaka, Phone : 9343930, 9341418