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প্রথিক অগ্রযাত্রা ফাউন্ডেশন
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Operations

Microfinance Operations Manual - Part 3: Legal & MRA Compliance

Chapter 1 – Introduction Part 3: Legal Framework, MRA Compliance & Institutional Philosophy

1.10 Legal Framework

1.10.1 Purpose

The legal framework establishes the statutory and regulatory foundation for the Microfinance Programme of Prothik Agrajatra Foundation (“the Foundation”). All microfinance activities shall be conducted in accordance with the applicable laws, regulations, directives, and guidelines issued by the Government of Bangladesh and other

competent authorities. The Foundation shall maintain a culture of legal compliance, ethical conduct, sound governance, and responsible financial management.

1.10.2 Applicable Laws and Regulatory Framework

The Foundation shall comply with all applicable laws and regulations, including but not

limited to:

  • The Constitution of the People’s Republic of Bangladesh.
  • The laws governing trusts, societies, foundations, or non-governmental

organizations, as applicable to the Foundation’s legal status.

  • The Microcredit Regulatory Authority Act, 2006.
  • The Microcredit Regulatory Authority Rules, 2010.
  • Circulars, directives, instructions, and guidelines issued by the Microcredit

Regulatory Authority (MRA).

  • Applicable anti-money laundering and counter-terrorist financing laws and

regulations.

  • Tax, labour, employment, social security, and other relevant laws of Bangladesh.
  • Any other applicable legal or regulatory requirements issued by competent

authorities.

Where any provision of this Manual conflicts with applicable law or a mandatory regulatory requirement, the applicable law or regulatory requirement shall prevail.

1.10.3 Licensing Requirement

The Foundation shall not conduct regulated microcredit activities without obtaining and maintaining the appropriate authorization or licence required by the Microcredit Regulatory Authority (MRA), where such authorization is legally required.

The Foundation shall:

  • Maintain all required licences and registrations.
  • Submit regulatory returns within prescribed deadlines.
  • Cooperate fully with regulatory inspections.
  • Provide accurate information to regulatory authorities.
  • Promptly implement regulatory directives.

1.10.4 Regulatory Relationship

The Foundation recognizes the supervisory authority of the Microcredit Regulatory Authority (MRA) over licensed microfinance institutions. Accordingly, the Foundation shall:

  • Maintain transparent communication with regulators.
  • Respond promptly to official correspondence.
  • Facilitate inspections, audits, and supervisory reviews.
  • Preserve regulatory records.
  • Report material events where required by law.
  • Implement corrective actions arising from regulatory observations.

1.11 MRA Compliance Framework

1.11.1 Compliance Objective

The objective of the compliance framework is to ensure that all microfinance operations are conducted lawfully, ethically, prudently, and in accordance with MRA requirements. Compliance is the responsibility of every employee, not only management or the

compliance function.

1.11.2 Compliance Principles

The Foundation shall operate according to the following compliance principles:

Legality Every operational decision shall comply with applicable laws and regulations.

Accountability Employees shall remain accountable for compliance within their assigned responsibilities.

Transparency Operations shall be properly documented and capable of independent verification.

Documentation No financial transaction shall be undertaken without appropriate supporting

documentation.

Continuous Monitoring Compliance shall be monitored through routine supervision, internal control, and internal

audit.

1.11.3 Compliance Responsibilities

Board of Trustees

The Board shall:

  • Approve organizational policies.
  • Oversee regulatory compliance.
  • Ensure adequate governance.
  • Review compliance reports.
  • Promote ethical leadership.

Executive Director

The Executive Director shall:

  • Implement Board-approved policies.
  • Ensure regulatory compliance throughout the organization.
  • Allocate adequate resources for compliance.
  • Promote a culture of integrity and accountability.

Compliance Officer (or Designated Officer)

The Compliance Officer shall:

  • Monitor regulatory compliance.
  • Maintain a register of applicable laws and circulars.
  • Coordinate regulatory reporting.
  • Advise management on compliance matters.
  • Conduct compliance reviews.
  • Report significant compliance issues to senior management.

Branch Managers

Branch Managers shall:

  • Ensure branch-level compliance.
  • Verify documentation before loan approval and disbursement.
  • Maintain accurate records.
  • Supervise staff compliance.
  • Report irregularities promptly.

All Employees

Every employee shall:

  • Follow approved policies and procedures.
  • Protect client information.
  • Report suspected fraud or misconduct.
  • Participate in compliance training.
  • Avoid conflicts of interest.
  • Act honestly and professionally.

1.12 Institutional Philosophy

1.12.1 Philosophy Statement

The Foundation believes that access to financial services is a means to improve livelihoods, strengthen resilience, and create opportunities for sustainable development. Microfinance shall therefore be delivered as a responsible development service rather than merely as a lending activity.

The Foundation’s philosophy is built on the belief that financial inclusion should empower clients while safeguarding their dignity, rights, and long-term financial well-being.

1.12.2 Client-Centred Approach

The Foundation shall place clients at the centre of all operational decisions.

Accordingly:

  • Financial products shall be designed according to client needs.
  • Loan amounts shall reflect repayment capacity.
  • Product terms shall be clearly explained.
  • Clients shall receive respectful treatment.
  • Complaints shall be addressed fairly and promptly.

1.12.3 Responsible Finance

The Foundation is committed to responsible finance by:

  • Preventing over-indebtedness.
  • Conducting proper credit assessments.
  • Ensuring transparent pricing.
  • Avoiding abusive collection practices.
  • Promoting financial literacy.
  • Encouraging productive use of loans.

1.12.4 Poverty Reduction and Sustainable Livelihoods

The Foundation recognizes that sustainable poverty reduction requires more than credit

alone. The Microfinance Programme shall therefore support:

  • Income-generating activities.
  • Enterprise development.
  • Household resilience.
  • Women’s economic empowerment.
  • Savings mobilisation.
  • Financial capability.
  • Community development initiatives.

1.12.5 Good Governance

The Foundation believes that good governance is essential for institutional sustainability. Accordingly, the Foundation shall:

  • Maintain clear governance structures.
  • Separate governance from day-to-day management.
  • Promote accountability at all levels.
  • Ensure independent oversight.
  • Strengthen internal control systems.
  • Foster ethical leadership.

1.12.6 Financial Sustainability

The Foundation aims to achieve long-term sustainability by:

  • Maintaining high portfolio quality.
  • Managing operational costs prudently.
  • Diversifying funding sources where appropriate.
  • Strengthening savings mobilisation (subject to applicable law).
  • Improving operational efficiency.
  • Investing in staff capacity and technology.

Financial sustainability shall always be pursued in a manner consistent with the

Foundation’s social mission.

1.12.7 Continuous Improvement

The Foundation is committed to continuous organizational learning. Management shall periodically review:

  • Policies.
  • Operational procedures.
  • Risk management practices.
  • Client feedback.
  • Audit findings.
  • Regulatory developments.
  • Technological innovations.

Lessons learned shall be incorporated into future policy revisions and operational

improvements.

1.13 Compliance with Other Internal Policies

This Operations Manual shall be read together with the Foundation’s other approved

policies, including:

  • Human Resource Policy.
  • Finance and Accounts Policy.
  • Credit Policy.
  • Savings Policy.
  • Procurement Policy.
  • Asset Management Policy.
  • Internal Control Policy.
  • Internal Audit Charter.
  • Risk Management Policy.
  • AML/CFT Policy.
  • Information Security Policy.
  • Complaint Handling Policy.
  • Child Protection Policy (where applicable).
  • Safeguarding Policy (where applicable).

Where a matter is specifically governed by another approved policy, that policy shall apply in conjunction with this Manual.

1.14 Statement of Commitment

Prothik Agrajatra Foundation commits to conducting all microfinance activities lawfully, responsibly, transparently, and ethically. The Foundation shall continuously strengthen its governance, compliance systems, and institutional capacity to ensure that its financial services contribute to sustainable development, financial inclusion, and the long-term well-being of the communities it serves.

End of Chapter 1 – Part 3