Staff Correspondent:

The volume of loans disbursed by the country’s Microfinance Institutions (MFIs) increased by more than 9.0 per cent to reach Tk 1.32 trillion during the first half of the current fiscal year (FY) over the corresponding period of last fiscal.

During the July-December period of the FY 2023-24, the total lending by the MFIs was Tk 1.21 trillion, available official data revealed.

In the entire FY 2023-24, the aggregate amount of loans disbursed by the country’s MFIs saw a 5.6 per cent growth over the previous fiscal.

MFIs disbursed loans to the tune of Tk 2.63 trillion in the last fiscal compared to that of Tk 2.49 trillion in FY 2022-’23, according to the official figures.

The total lending by MFIs was Tk 1.50 trillion in FY’23.

However, the amount of overdue loans remained persistently high, raising some concerns over the financial health of grassroots borrowers.

The MRA data also said overdue loans stood at Tk 159.6 billion in the first half of FY25.

The amount of overdue loans also increased to Tk 162.1 billion in FY24 from Tk 153.9 billion in FY23, the figures showed.

Despite showing an upward trend in the recovery of loans, the total ratio of overdue loans to total outstanding amount also increased to 10.37 per cent in FY24, slightly up from 10.23 per cent in FY.23.

Experts, however, attributed such rising amount of overdue loans in the MFIs sector to shrinkage of increased number of the borrowers’ capacity to repay their loans in time.

When asked, Professor Dr Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), said rising inflation and eroded purchasing power affected the loan recovery rate to some extent in the country’s microfinance sector.

He also hinted that easing inflation in the coming months might help improve the situation.

Echoing the same tone, Managing Director of Palli Karma Sahayak Foundation (PKSF) Md. Fazlul Kader also said loan recovery rates had been affected by increased inflation and political instability to some extent in recent times.

He, however, stressed the need for reduction of economic disparities in the society and enhancing investment for giving an impetus to inclusive growth for helping improve both disbursement and recovery of loan by MFIs.