The Microcredit Regulatory Authority (MRA) has directed all licensed microfinance institutions (MFIs) to ease loan recovery and provide fresh loans to borrowers affected by the recent devastating floods in five south-eastern districts, aiming to support emergency relief and speed up economic recovery.
In a circular issued recently, the regulator instructed MFIs to adopt special measures for borrowers in Chattogram, Cox's Bazar, Rangamati, Khagrachhari and Bandarban, where heavy rainfall and flash floods have caused widespread damage to homes, livelihoods and infrastructure.
The MRA said microfinance institutions should distribute emergency relief materials, including dry food, drinking water and essential supplies, from their disaster funds in coordination with local administrations.
They have also been asked to remain engaged in rehabilitation activities in the affected areas.
To help borrowers recover from flood-related losses, the regulator instructed MFIs to consider rescheduling loan repayments and, where necessary, provide new emergency loans based on borrowers' repayment capacity. It also asked institutions to ensure that fresh credit reaches affected clients quickly so they can restart income-generating activities.
The circular further directed MFIs to use their disaster management funds for relief and rehabilitation and, if additional resources are required, seek approval from the relevant local authorities and the MRA within one month for supplementary expenditure.
The latest directive comes as continuous rainfall triggered severe flooding across the Chattogram Hill Tracts and adjoining districts, disrupting transport, damaging crops and leaving thousands of families stranded.
The MRA, established under the Microcredit Regulatory Authority Act, 2006, regulates the country's fast-growing microfinance sector. It oversees licensed MFIs to ensure sound governance, financial discipline and the protection of borrowers' interests.
Bangladesh has one of the world's largest microfinance sectors, serving millions of low-income households, particularly in rural areas where access to conventional banking remains limited. The sector plays a significant role in financing small businesses, agriculture and self-employment, while also providing emergency financial support during natural disasters. According to the latest MRA data, more than 900 licensed microfinance institutions operate across Bangladesh, collectively serving over 40 million borrowers through tens of thousands of branch offices.
The sector has an outstanding loan portfolio worth several hundred billion taka, making it a crucial source of financial inclusion and rural economic activity.
The regulator had issued similar directives after previous floods and cyclones, encouraging MFIs to balance financial discipline with humanitarian support by temporarily relaxing loan recovery measures while extending fresh credit to help affected borrowers rebuild their livelihoods.
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