Business Visas in Bangladesh | Types, Eligibility and Requirements and how to get them | Immigration Law Firm in Dhaka, Bangladesh

Business Visas in Bangladesh | Types, Eligibility and Requirements and how to get them | Immigration Law Firm in Dhaka, Bangladesh

Bangladesh Business Law –  Top Commercial Law Firm in Dhaka Bangladesh

Business Visa in Bangladesh | Types and Requirements

Tahmidur Rahman, Managing Partner

8 jan 2020

Business Visa in Bangladesh

Business visa is valid for six months in Bangladesh and as it is a multi-entry visa. From up to three to five (3-5) years, you can extend your business visa to Bangladesh.

You don’t get a business visa to work in Bangladesh. If you’re going to get a job, you need a work permit.

Nevertheless, you can use your business visa to carry out activities such as:

 

  • Meeting your (potential) business partners or government officials
  • Visit different business sites
  • Conducting feasibility studies and market research
  • Meeting with employees
  • Establishing a company in Bangladesh

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Obtaining process of a visa in Bangladesh 

Bangladesh offers various types of visas to foreign nationals who want to use the current investment and work opportunities provided by the Bangladesh government. Visa from any foreign country is relatively easy to obtain, but there are no clear guidelines and the procedure of diplomatic missions in Bangladesh varies from mission to mission.

A visa to be obtained from the Bangladeshi diplomatic mission in the country of the visa applicant will be required for business visitors to Bangladesh. Depending on the political climate and other domestic issues, visa availability varies. It is generally recommended to obtain a visa before arrival in your home country.

General Requirement of visa (There will be additional requirement based on the type of visas)

  • Filled-in application form
  • Photographs (Size: 37mmX37mm and recent one): 02 copies
  • Valid passport and
  • Payment receipt of visa fee

Types of Visas:

 

Here are the Visa Classifications in details:

 

 Business Visas in Bangladesh

 

Business visa is usually approved for business people who want to make use of the possibility of doing business in Bangladesh. For example, meeting various business people and government officials to make investments in Bangladesh, visiting factories and workers, testing legal barriers, contacting various staff to discuss possible business strategy in Bangladesh. However, the purpose of such a visit should be limited to the type of activities mentioned above and the person with business visa is not permitted to do any kind of business without the permission of the relevant authority (e.g. BIDA, BEPZA) or to engage in any kind of work without work permit.

  • Eligible individuals: entrepreneurs or their members.
  • Authorised length of stay: In general, B visa is granted with a fixed length of stay in each entry for a period of 3 to 6 months. The applicant must indicate the intent of the visa and how long the applicant wishes to stay in the application form in Bangladesh.
  • Indicative list of required documents: Endorsement from recognised chambers of commerce or local sponsor’s endorsement in Bangladesh and declaration of good standing / business credentials.

        Employment Visa in Bangladesh

A Bangladesh employment permit enables its holder to work and be employed in the country. It is a multi-entry visa and is valid for three (3) months in the beginning. Therefore, once it loses its value, you can also expand it. Note, however, that the period of validity depends on the duration of the contract of employment. The Department of Immigration and Passports will subsequently extend the validity of a multi-travel facility visa for a maximum period of 1 (one) to 2 (two) years at a time, based on the receipt of a work permit for employees, airlines, banks and insurance companies and on the recommendation of Bangladesh’s sponsors. 

Eligible persons:

(A) Govt-employed experts / consultants / employees. /Half Govt. Organization, organisations that are independent and similar.

(B) Local and Foreign Govt./Private, Industrial / Trading Organizations and Liaison Office, Branch Office employees and employees.

(C) Local and foreign workers and individuals. /Private undertakings and institutions of the same class.

Authorized duration of stay: The relevant Bangladesh Mission initially issues visa for a maximum period of 3 (three) months subject to submission of papers/documents in support of the appointment with application.

Indicative list of required documents: Letter of Appointment and Letter of recommendation from the concerned Ministry in Bangladesh / Bangladesh Investment Development Authority (BIDA) / Bangladesh Export Processing Zones Authority (BEPZA)

 

 

 Investment Visas in Bangladesh

 

The primary purpose of the Bangladesh investment visa is to allow the holder to attend business meetings and keep them. But these meetings will, of course, be linked to their domestic investments.

The initial duration of this visa is one (1) year with a maximum of three (3) months per year, which means that every three (3) months the investor has to leave and re-enter Bangladesh. The visa may be extended up to five (5) years if the investor decides to continue investing in Bangladesh.

Note that a letter of recommendation is required for this visa. It can be from either a local or a Bangladesh sponsor from abroad. Another prerequisite is that you need a BEPZA or BOI certificate to prove you have a Bangladesh investment.

In general, seven (7) working days are the process time for this visa. You must seek a visa from a foreign embassy in Bangladesh.

Recall also that the investment visa does not allow employment to be taken up. Therefore, if you are planning to be employed in Bangladesh by a corporation, you must also obtain a work permit.

FE VISA in Bangladesh

Eligible Individuals: spouse and other dependent members of the Principal Visa group E.

Authorized period of stay: the same length of stay as the Principal visa trip in the E category.

Indicative list of required documents: Relevant documents e.g. birth/ marriage certificates / letter from recommending authority

 

“Visa from any foreign country is relatively easy to obtain, but there are no clear guidelines and the procedure of diplomatic missions in Bangladesh varies from mission to mission.”

Visa on Arrival in Bangladesh:

 

Eligible people: HSIA may also apply for VOA from foreign investors and business persons. VOA may not be qualified for by all nationals. The issuance of this visa is the Bangladeshi immigration officer’s sole discretion.

Permitted length of stay: 30 days.

Required document indicative list:

a. The candidate for the LP / VOA must have a return ticket together with

b. Letter or identity certificate from various associations of export-oriented commercial / industrial organizations (i.e.–FBCCI / BGMEA) in their letterhead specifying the relationship between the claimant and the organization and the length of the relationship.

c. The VOA applicant must have US $500 or equivalent foreign currency endorsed in his/her passport, credit card, debit card, travellers’ cheque or in cash.

 

 

 

➤ E1 Visa in Bangladesh –

 

Authorized length of stay: E1 visa is granted by the Embassy of the People’s Republic of Bangladesh of the country concerned for a maximum period of 6 (six) months, subject to the presentation of papers / documents in support of the appointment.

 

Eligible persons: Persons visiting equipment and software / project supervision supply / installation / maintenance etc. Indicative list of required documents: invitation from the local sponsor, copy of the agreement, recommendation from the Bangladesh Investment Development Authority (BIDA)/Bangladesh Export Processing Zones Authority (BEPZA)/department / agency.

 

 

 

➤ PI Visa in Bangladesh:

 

 

Eligible Persons: Investors in existing / new / under construction / new industrial / commercial entity in the private sector under a joint venture or a 100% foreign-owned company Authorized length of stay: PI visas shall be issued at the first application for a period of 3 months, if applied with the relevant documents.

Authorized duration of stay: PI visas are issued for a period of 3 months at the first application, if applied with relevant documents.

Indicative list of required documents: Certificate / Letter of BIDA / BEPZA (if applicable) certifying that the applicant is a genuine investor

 

 

 

➤ A3 Visa in Bangladesh-

 

Eligible Persons: Experts / advisers / officials / staff members / labors working in any project under the bilateral / multilateral agreement between Bangladesh government

and development partner agencies

Authorized duration of stay: The concerned Bangladesh Mission grant A3 visa for a maximum period of 3 (three) months subject to submission of appointment letter upon application.

Indicative list of required documents:

1. Recommendation from concerned Ministry / ERD / Govt. Organization and copy of agreement.

2. Security clearance from Ministry of Home Affairs.

 

 ➤FPI Visa in Bangladesh

 

 

 

Eligible Persons: Spouse and dependent members of the Principal travelling on PI category visa

Authorized duration of stay: same duration as Principal travelling on PI category visa.

Indicative list of required documents: Relevant documents e.g. birth/ marriage certificate / letter from recommending authority

➤FA3 Visa in Bangladesh:

 

 

Eligible Persons: Spouse and other dependent family members of A3 visa holders.

Authorized duration of stay: same duration as Principal traveling on A3 category visa.

Indicative list of required documents:

1. Recommendation from concerned Ministry / ERD / Govt. Organization/copy of agreement/MOU etc. with GOB.

2. Police Verification Report

 

 

➤ J visa in Bangladesh

Eligible Persons: Journalists of newspapers / magazines / TV or radio networks / news agencies / representatives of print, electronic or satellite media / freelance journalists etc.

Authorized duration of stay: usually 3 years

Indicative list of required documents: A clearance from the Ministry of Foreign Affairs ‘ External Publicity Wing is required for the issuance of J category visa. Usually it takes 21 days to process after the application has been submitted. The applicant must also apply, together with the visa application form, duly filled in FF-I and FF-II forms.

 

 

 

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What to do When cheque dishonour or bounce in Bangladeshi Law?

What to do When cheque dishonour or bounce in Bangladeshi Law?

Cheque Dishonour or Bounce in Bangladesh – Law, Solution, Retrieve, Remedies, Punishment – A complete Overview

Tahmidur Rahman, Senior Associate 

5 Aug 2019

What to do When Cheque Dishonour or Bounce in Bangladesh? How can you take legal actions to retrieve your money? This post provides complete overview of how to deal with cheque dishonouring in Bangladesh.

Cheque Dishonour or Bounce in Bangladesh

Currently, even a business organisation in Bangladesh like many other countries, without maintaining a bank account, can not operate its daily activities. Despite the massive development in the recent past in Bangladesh of alternative delivery channels such as Internet Banking, BEFTN (Bangladesh Electronic Funds Transfer Network), RTGS (Real Time Gross Settlement) and many other aspects of digital banking, people are still comfortable enough to use checks for personal and business transactions. In the case of large-scale transactions, the use of checks is obviously the best way in our country because of security issues.

The possibility of a check being dishonoured is significantly high due to the high number of transactions through this mode. The receiver of checks must therefore have sufficient and effective legal redress, which they can consider when faced with this situation. Recently, in a case of dishonouring the test, a well-known film actor has been accused and filing these cases is almost regular occurrences with different courts across our country. People deliberately issue checks without making funds available in their bank accounts due to a lack of integrity and ethical practice. It may only seem to be a misdemeanour, it is, in fact, a serious crime.

Cheque Dishonour or Bounce – In Laws of Bangladesh

Both the government of Bangladesh and the Bank of Bangladesh have taken a number of steps to provide adequate legal remedy to protect and pull this state. The following discussion will focus on our country’s prevailing check dishonour law:

1. The most vital law enacted to provide legal remedy to such a situation is the Negotiable Instruments Act, 1881 (Act No. XXVI of 1881). Section 6 of this Act established what constitutes a cheque, stating that’ a bill of exchange drawn on a stated banker and not presented as payable other than on order.’ In addition, in the case of laws, a check was also known as an order on a borrower by a lender to pay the whole or part of a debt to another person.

2. If a check is not cleared because of insufficient funds or if the debtor who issued the check to the lender ordered his bank to dishonor the check or for any other reason, then the remedy will be under Section 138 of the above Act.

3. Section 138 of the Negotiable Instrument Act, 1881 makes it clear that, whenever a check is bounced, it is then accepted as correct until it is otherwise proved that an unscriptural guilt is created which involves punishment of a criminal nature which may include 01 (one) year of captivity or fine, which may extend to three times the value of the dishonoured check or both. In addition, the person who is regrettable also has a civil remedy under the same section, and in order to obtain the civil remedy, the person has to take some steps.

4. The first issue to be assessed by the court is whether the check has been presented to the bank for withdrawal within six months of the person being dismissed. If the check has been presented to the bank for withdrawal any time after it has been given to the regrettable person for six months, then the court will not allow the claim. Considering that the check has been submitted within a valid period of time and if it is dishonored, then pursuant to Section 138 of the Negotiable Instrument Act, 1881, the unfortunate person must send a written notice by registered post with acknowledgement due to the person who gave the check claiming the money back.

5. This notice requiring the money back must be sent within 30 days after the check has been bounced, that is, when the regrettable person has been notified that the check given has bounced due to insufficient funds or other reasons. Again, the court will not provide any redress if the notice demanding the money is not sent within the constitutive time. After the above process has been completed and the person receiving the notice does not pay back the money within 30 days of receiving the notice, the mortified person will be allowed to bring a civil claim against that person for the recovery of the money.

6. It should be remembered that the crime of dishonor of the search referred to in section 138 of the Act is considered a criminal offence. The legislation was aimed at punishing and not obtaining a due sum. Nevertheless, the section retains the possibility of restitution as the owner of the check can be paid by the court an amount of any fine recovered up to the check value. If someone wants to recover cash that has not been discovered then he or she will file a civil suit for money recovery. In reality, however, it was found that filing a criminal proceeding under s.138 was the most effective way to recover money.

 

Step by Step Process for filing a case for Cheque Dishonour or Bounce in Bangladesh

The recipient of the check may file a case against the applicant under the following conditions:

(A) Submitting the check to the bank:

The default check must be submitted to the bank for encashment within 6 months from the date it is drawn. If the check is dishonored, due to such dishonour, the bank shall give a slip.

(B) Legal Notice:

Upon obtaining a check dishonor slip from the bank, the payment application shall be made by notifying the giver of the check within 30 days by registered post. The recipient will give the money back for 30 days.

(C) Implementing Section 138

Unless, within 30 days of receiving the notice, the giver of the check fails to make the payment of the said amount of money, the receiver of the check shall file a case under section 138 of the Negotiable Instruments Act, 1881.

Now where and how to file a case for Cheque Dishonour or Bounce in Bangladesh

 

The recipient of the check may file a case against the applicant under the following conditions:

When the owner presents the check for encashment to a bank, he will bring in court the claim for check dishonor that has local jurisdiction over that bank.
The offense of check dishonor can be completed with the emphasis on certain specifics:

i) drawing of the check,

ii) presenting the check,

ii) returning the check unpaid by the drawee bank,

iv) giving written notice to the drawer of the check demanding payment of the check sum,

v) failure of the drawer to make payment within 30 days of receipt of the notice.s of receiving the notice, the giver of the check fails to make the payment of the said amount of money, the receiver of the check shall file a case under section 138 of the Negotiable Instruments Act, 1881.

Now, if the above five different acts were carried out in five different locations, one of the courts exercising jurisdiction in one of the five local areas could become the place of trial for the offense of cheque dishonour. The plaintiff may select any of the courts in whose jurisdiction any of the five components of the said offense have been made.

Essential documents you need if you would like to file a case against a dishonoured cheque in Bangladesh

Before proceeding to file a case, a complainant must keep some essential requirements in mind which are as follows:

  • The dishonoured cheque
  • Bank slip regarding cheque dishonour
  • Copy of legal notice
  • Postal receipt and acknowledgment letter of legal notice
  • Copy of newspaper where legal notice is published, if any
  • Authorization letter or power of attorney if ‘Authorized Agent’ files the case
  • List of witnesses
  • Costs of the case such as Court fee, lawyer’s fee etc.
  • Government or private legal aid if unable to bear the costs of the case
  • Intention to go for settlement with the offender to get the money.

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PENALTY FOR CHEQUE DISHONOUR or Bounce in Bangladesh:

The offender who commits the dishonor of the cheque shall be punished with imprisonment for a term of up to one year or with a fine of up to three times the value of the cheque or both.

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Regulations of Microcredit & Financial Institutions in Bangladesh

Regulations of Microcredit & Financial Institutions in Bangladesh

Regulations of Microcredit & Financial Institutions in Bangladesh

 

Tahmidur Rahman, Senior Associate

5 Aug 2019

What are the rules and Regulations of Microcredit & Financial Institutions in Bangladesh regarding incorporating and then managing a microcredit and microfinance institutions in Bangladesh? What are the regulatory compliances to maintain for an already established one? We explain everything in details in this post.

The concept of Microcredit and Microfinance

 

Before diving on to the rules and Regulations of Microcredit & Financial Institutions in Bangladesh, let’s recap the concept of microcredit and microfinance. Although the practice of lending small amounts of money for investment and consumption purposes has been popular in Bangladesh, modern structured, systemic, group-based and institutionalized micro-credit operations are Bangladeshi developments, pioneered by the Grameen Bank and replicated around the world with local modifications and adaptations. The system has experienced explosive growth here and elsewhere, and has given hope to millions of poor and lower middle class men & women and to generate income to get out of poverty. The Microfinance Management System has overcome the structural problems of targeting and providing financial services to millions of poor people.

The Societies Registration Act 1860, Companies Act 1994, Cooperative Societies Act 1984, Charitable and Religious Trust Act 1920 and Trust Act 1882 are the acts under which NGOs operating under microcredit programs may be registered. NGOs eligible to receive donations from different foreign sources must be registered with the NGO Office of International Contributions (Voluntary Activities) Regulation Ordinance 1978.

The MFIs was found to have transaction costs. Identifying and choosing target lenders and maintaining a high level of loan recovery are also expensive.

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Microcredit in Bangladesh

The continued “double-dip” slowdown in the investment markets is impacting Bangladesh’s economies. In addition, recent over-indebtedness problems in several countries have shown that there is over-supply of micro-credit. In this context, Bangladesh’s microfinance sector has shown great resilience and continues to contribute to the improvement of macroeconomic development. Bangladesh has achieved a remarkable achievement in financial inclusion in Asia. Approximately 81% of its adult population, including both the formal and microfinance markets, has been put under financial inclusion under the guidance of Micro regulation authorities, i.e MRA and Bangladesh Bank.

According to a recent World Bank survey, Bangladesh is second amongst the Asian countries to Sri Lanka in terms of financial inclusion indicators. The report shows that 40% of Bangladesh adult’s accounts are in formal financial institutions, which is 35% in India and 10% in Pakistan. MFIs in Bangladesh are already working with remittance channeling banks and mobile money transfer software. Bangladesh has also made good progress in terms of consumer rights and empowerment. The total savings has also increased by 23.25 percent to BDT 63.3 billion in June 2011 compared to previous year from 26.1 million clients, over 93 percent of them are women.

Regulations of Microcredit & Financial Institutions in Bangladesh

The Microcredit Regulatory Authority (MRA) was founded by the Government of the People’s Republic of Bangladesh under the Microcredit Regulatory Authority Act 2006 to promote and promote sustainable development of the microfinance sector by establishing an enabling environment for NGO-MFIs in Bangladesh. As the regulatory organ, MRA determines the rules and regulations of Microcredit & Financial Institutions in Bangladesh, i.e the NGO-MFIs. The Authority’s license is required to carry out microfinance operations in Bangladesh. MRA provides statistical information on the microfinance market on a regular basis. The NGO-MFIs provide operating data on the specified format twice a year and financial information on a yearly basis. The Government passed the Microcredit Regulatory Authority Act 2006 in July 2006 on the basis of suggestions made by the Committee. Under this Act, the Government established a separate Microcredit Regulatory Authority (MRA) and appointed its Board of Directors, chaired by the Governor of the Bank of Bangladesh. Under this new law, all operating MFIs will have to apply for a license from the Authority. No MFIs will be allowed to operate within the country without a license from the Authority. According to the legislation, all organizations that have a microcredit operation must separate their financial operations from other development works and keep their accounts separate.

The top three MFIs contribute 54% of the total outstanding loans as well as deposits of the microfinance sector in Bangladesh. Two of the largest MFIs, BRAC & ASA, each represent more than five million lenders. There are a few more of them evolving quickly. On the other hand, the smallest 428 NGO-MFIs contributed just 4 per cent of the total outstanding loan and 5 per cent of the total savings. The corporate dominance ratio is highly skewed in favor of large MFIs: only 22 companies hold 76% of the market share, while the three largest entities manage more than 50% of both the clients and the total financial portfolios.

On the other hand, Grameen Bank offers credit without collateral for a wide range of revenue generation and asset building activities. It also provides its members with housing loans. During the 2009-10 fiscal year, its cumulative microcredit disbursement amounted to Tk 91.9 billion, which was more than 28 per cent of the previous year. The number of its borrower members rose to 90,000, and 95% of them were women. It operates in over 45.000 villages. Several major micro-credit initiatives in Bangladesh that implement Grameen’s group-based approach include Brac, an NGO with more than 1 million members, and the Bangladesh Rural Development Board (BRDB), a government agency offering micro-credit to some 500,000 members.

Legal Requirements to be an NGO-MFI in Dhaka, Bangladesh

 

The organization/person willing to operate Microcredit activities in Bangladesh shall submit application to the Microcredit Regulatory Authority in Prescribed Form and Prescribed manner, which is available to access by legal entities in Microcredit Regulation Authority office (MRA) in Bangladesh. And that is only possible or applicable for the prospective applicant institutions after getting registration as an NGO under any of the following acts:

  1. The Societies Registration Act, 1860 (Act XXI of 1860);
  2. The Trust Act, 1882 (Act II of 1882);
  3. The Voluntary Social Welfare Agencies (Registration and Control) Ordinance, 1961 (Ordinance No. XLVI of 1961);
  4. The Companies Act, 1994 (Act XVIII of 1994).


 License Issuing Procedure of MFI-NGO’s in Bangladesh

 

(1) In order to obtain a license, a person shall apply to the Authority in the prescribed form set out in the given form by MRA.

(2) Upon receipt of the request in the following form, the Authority shall evaluate the information provided with the request and, upon satisfaction, request the payment of the required license fee. (Follow the figure below).

 

(3) The Authority shall issue the license in the form set out in Annex B within 10 (ten) days of receipt by the applicant of the license fee referred to in sub-clause (2).
(4) If the application is denied, the Authority shall inform the applicant in writing within 30 (thirty) days of the rejection.
 


 License Issuing Procedure of MFI-NGO’s in Bangladesh

 

(a) The licensed entity shall abide by the law and all provisions of this Microcredit Authority Provisions 2010;

(b) the licensed organization shall not be able to operate its Microcredit Activities outside the area of operation approved by the Registration Authority;

(c) the full address of the Head Office and the Branch Offices of the company shall be notified to the Authority;

(d) any alteration in the area of operation permitted by the Registration Authority; 

(e) any change of address of the Head Office shall be notified to the Authority in advance;

(f) changes to the address of the Head Office or Branch Office shall be notified to the Customers and to all other relevant parties;

(g) the licensed organization shall pay the annual fees mentioned in the table beforehand;

(h)The licensed organization must provide all information as required by the Authority and extend all co-operation in carrying out any inspection and investigation by the Authority.

“CLP is Considered as one of the leading firms in Investment Law in Dhaka, Bangladesh”

Carpe Noctem Bangladesh

Models of Lending in Bangladesh 

 

1. Grameen Bank Style Microfinance

 

For all practical purposes, existing regulations of Microcredit & Financial Institutions in Bangladeshis is regulated by working out the presented by the Grameen Bank’s simple group-based approach. The basic structure is as follows: poor women and men are grouped into classes or groups that meet once a week to deposit a small amount of savings to build up their own resources. The Bank or MFIs lends a one-year loan (some MFIs repay loans within 43-46 weeks) which the lender repays in equal weekly instalments along with interest. Once the lender repays one loan, it is entitled to obtain another loan normally of a higher amount within the total loan limit, which, of course, is adjusted upwards over time.

 

The methodology was found to be so reliable and efficient that almost the entire industry adopted this method with minor adjustments to savings / credit policies such as savings and loan interest, savings withdrawal rules, etc. Today, almost 33 million women and men are working on this basic system every week. With time, however, both the Bank and other MFIs have modified their processes to deliver more than one form of savings and credit products, as the complexity of demand has changed and MFIs have also learned to deal with more complex situations.

 

        2: Self Help group system

 

A handful of non-governmental organizations have attempted and are still pursuing the so-called self-help group approach to creating a financial service delivery system. In this case, the organizer or NGO organizes self-help groups with the goal of promoting the mobilization of savings among disadvantaged women and men. If the participating members need a loan, they can borrow from their samity, i.e. their own savings funds. If the funds are not sufficient, the self-help Samities may seek to borrow additional capital from banks or the NGO. The second option was tried in Bangladesh, but the first alternative was not possible.

 

        3: Individual Lending System

 

As the Regulations of Microcredit & Financial Institutions in Bangladesh are maintained by both the MRA and the Bangladsh Bank, the central issue in designing an individual system as opposed to a group-based system is to deliver flexible and demand-driven services to each client / borrower. The group-based system is seen as a’ one-size fits all’ system. The individual loan strategy, i.e. providing savings and credit services to each customer on the basis of the particular client’s request. Flexibility may occur in the form of the amount and frequency of the deposit of savings, the amount of the loan and the length of the loan, the repayment of the amount of the loan and the frequency of installments (no fixed schedule is considered flexible) etc.

Nevertheless, lending to individuals does not necessarily make it entirely’ flexible.’ For example, ASA and BRAC disburse loans to individual clients under their respective microenterprise loan programs but offer a fixed one-year loan and a fixed monthly repayment plan.

 

4.Fin-tech money lenders 

 

Although currently there’s no money lending MFI which is solely operating on FinTech-enabled payment processing and modelled their micro finance institutions according to that modern app based payment skeleton structure presented in other countries all around Asia, like Moneytap or koinworks. Implementing a credit based money lending through apps in bangladesh will play a huge role in modern era of lending credits. This  will also reduce the amount of cash needed for printing and distributing currency notes. In addition, it will help mitigate the risks of counterfeit currencies circulating in the country. Reduced cash requirements would help the central bank reduce costs and manage risks.

Currently in Bangladesh, specialized financial institutions for processing transactions are generally referred to as payment banks. Payments banks are especially useful for people who do not have a bank account but engage in payment activities. FinTech allows these banks to keep their operating costs to a minimum. Payments banks are exploiting mobile telecommunications infrastructure and their large subscriber base to remove the barriers to entry. They compete with cash transactions to provide their customers with a simpler, faster and cheaper alternative. FinTech will help to achieve all of this for payment banks. With the right kind of guidance from regulators, the payment sector in Bangladesh could grow rapidly.

5.Informal money lenders

 

Informal money lenders are another typical source of micro-loans that follows’ individual loans.’ No up-to-date information and research on their activities is available. Nevertheless, it is assumed, on the basis of anecdotal evidence and small studies, that rural poor are no longer dependent on money lenders for small loans due to the proliferation of MFIs. We have the potential to borrow from one or more MFIs for investment or, in some cases, for consumption purposes. Nevertheless, due to the lack of a large-scale agricultural loan from MFIs, money lenders can still be found borrowing for emergency loans to the poor and also for agricultural loans.

 

 

“Implementing a credit based money lending through apps in bangladesh will play a huge role in modern era of lending credits.”

Can fintech loan apps can mushroom in bd 

The four key elements of the Digital Bangladesh Vision Government are the creation of human resources, the participation of women, civil services and, finally, the use of technology in businesses. Since the use of technology in industry is one of the key elements of “Virtual Bangladesh Vision,” MFS has made the most significant improvement over the years. However, only 47% of the population is still financed. Meaning that only 47% of the population has access to useful and affordable financial products and services that meet their needs–transactions, payments, savings, credit and insurance–delivered in a responsible and sustainable manner.

 

Fintech & Microcredit in Bangladesh

 

MFS still in its infancy has many downsides, for example: interoperability, limited service and withdrawal restriction among others. On the other hand, MFIs are currently facing competition from the finance and agent banking sectors. MFIs lack a comprehensive IT infrastructure that limits their ability to provide a variety of products and services to the financially excluded remote parts market. On the other hand, if we take a look at agent banking, we’ll see how both the collection of deposits and the disbursement of loans have grown. As of September 2018, the loan disbursement through the agent banking network amounted to BDT 150 crore, up 9.8% from a quarter earlier that year.

At the same time, the collection of deposits increased 28 per cent to BDT 2,577 crore, according to data from the central bank. As MFS and agent banking are more like an extension of traditional banks or in association with banks and mobile phone operators, they can easily remove customers from MFIs.
In fact, despite infancy in some cases, these MFS now even deliver savings to consumers, and they also have technical support. Nevertheless, social inclusion is not their main objective.
MFIs can use FinTech’s ability to address poverty in a pro-poor way by actively leveraging their large customer database.

Given all the benefits, the complete digitization of the microfinance sector will be strenuous as a number of challenges emerge.

First of all, the costs of developing virtual field applications are very high for MFIs. In a report published by UNCDF, one of the senior managers of a large MFI developed in Bangladesh suggested that hardware costs, for example: smartphone, tablets, would be too high for them.

One of the most difficult challenges for MFIs is to win customer trust. As most MFI clients are peasants, they lack financial and technical literacy. In fact, the TMSS Senior Manager stated that, if they ask their customers to apply for a loan.

 

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