Legal Status and Microfinance Institutions: An Overview of the Microfinance Sector in Bangladesh

Although the microfinance sector in Bangladeshis mainly drivenby Non-Governmental-Organizations (NGOs), there are other types of Microfinance Institutions (MFIs) also provide financial services to the poor. Despite the criticism ofmicrofinance programs,the current poverty situationin Bangladesh still requiressuch programsfor consistently battling poverty. Hence, the aim of this paper is to profile the microfinance sector based on their legal status and investigate any possible differences (if any) between them in various aspects. After a thorough investigation of the sector, we found that around 33 million of the clients are being served by the mainstreaming MFIs (NGO and Grameen Bank) while another 10-15 million clients are served by other types of MFIs (financial cooperatives, credit unions, various ministries etc.), which account for the one-third of the total population. While the mainstreaming MFIs basically works with poor, other categories of MFIs are concerned with relatively wealthy clients. Looking into the financial performance and social intermediation of the MFIs, the NGO-MFIs performed better than other types of MFIs in the sector.