DHAKA, Jan 29, 2026 (BSS) - The interim government has promulgated the ‘Microfinance Bank Ordinance, 2026’ to further streamline the country’s microcredit operations, create employment opportunities, alleviate poverty, and ensure ownership of microfinance institutions by borrowers themselves. Under the newly promulgated ordinance, microcredit borrowers will no longer remain only clients of financial institutions; they will now become shareholders and owners of microfinance banks. The Legislative Division of the Ministry of Law, Justice and Parliamentary Affairs published the gazette notification on the ordinance yesterday. Law ministry public relations officer Md Rezaul Karim confirmed the matter today. According to the 0rdinance, the ‘Microfinance Bank’ will be established with an authorised capital of Taka 500 crore, of which at least 60 percent ownership must be held by general loan-borrower shareholders. The ordinance also designates the bank as a “social business” entity, where earned profits will not be distributed as personal dividends but will instead be reinvested in social development and poverty alleviation activities. The ordinance shall be known as the Microfinance Bank Ordinance, 2026. Bank Formation and Capital Structure: The ordinance states that the bank may be established for a specific geographical area after obtaining a licence from Bangladesh Bank, the designated licensing authority. The authorised capital of the bank will be Taka 500 crore, while the minimum paid-up capital must be at least Taka 200 crore. At least 60 percent of the bank’s capital must be contributed by borrower-shareholders. However, any Microfinance Bank established under this ordinance will not be eligible for listing on the country’s stock exchanges. Board of Directors: Regarding governance, the ordinance provides for a nine-member Board of Directors. Of them, four directors will be elected from among borrower-shareholders. In addition, there will be three nominated directors, two independent directors, and one Managing Director serving ex officio without voting rights. No director will be allowed to serve more than two consecutive terms. Social Business and Dividend Policy: The ordinance defines the Microfinance Bank as a social business institution. It specifies that investors will not receive dividends beyond their original investment amount. However, this restriction may be relaxed in the case of general borrower-shareholders to allow them to benefit from their investments. The remaining net profits must be utilised for social welfare and poverty reduction purposes. Core Functions of the Bank: According to the ordinance, the principal functions of the Microfinance Bank will include providing loans for self-employment and poverty alleviation, accepting deposits, and offering startup capital for small entrepreneurs. The bank will also provide free technical and administrative support to micro-entrepreneurs, and extend credit facilities for industrial and agricultural products, livestock, and machinery. Loan Recovery and Regulatory Oversight: In cases of default loan recovery, the bank will be allowed to follow the Artha Rin Adalat Ain, 2003. However, the ordinance emphasises that loan recovery must be conducted with social sensitivity, and no coercive or humiliating methods may be employed. Bangladesh Bank will act as the licensing and regulatory authority and will retain the power to dissolve the Board of Directors or remove the Chairman or any director if necessary. All banking activities will also be governed by relevant provisions of the Bank Companies Act, 1991 and the Microcredit Regulatory Authority Act, 2006. The ordinance further states that the government will determine the effective date of implementation through a gazette notification at the earliest possible time.