The new law would help monitor the sources of funds of the non-government organisations (NGOs) and ensure transparency in their operations, he said while speaking as chief guest at the 26th annual general meeting (AGM) of the Association for Social Advancement (ASA) in Dhaka.

"It is necessary to know how and from where local NGOs are getting money. The proposed law would also help monitor the funding suspected to have terror links," he added.

Micro finance institutions (MFI) are spending funds both in transparent and nontransparent ways and it is necessary to bring discipline in their activities, the finance minister mentioned.

"Some of the NGOs getting funds from abroad are not interested in providing information about the fund sources and their spending," he explained.

Bangladesh Bank Governor Salehuddin Ahmed, President and founder of ASA Md Shafiqual Haque Choudhury and its Chairperson Tahrunnesa Abdullah also spoke at the AGM.

Saifur heavily criticised collateral system and said it is a western idea in providing loans for individuals and institutions. The idea did not work here properly as around Tk 30,000 crore has so far turned into default loans despite having collateral, he added.

He urged the MFIs to graduate their funding to medium and large scale lending from small scale to help create more small and medium enterprises (SMEs).

The minister termed agro-processing and fishery sub-sectors core areas for Bangladesh economy but regretted that bank officials don't provide loans for these sub-sectors without 'extra financial benefits'.

Speaking at the meeting, Salehuddin Ahmed said MFIs should come forward to reduce gap between service charge and cost of funding so that the borrowers can benefit more from the loans.