Financial inclusion in Bangladesh

  • Mohammad Abdul AWAL, Credit and Development Forum, CDF (Bangladesh)
  • Tanvir Rahman DHALY, BRAC
  • Guy STUART, Microfinance Opportunities (MFO)
  • Abhishek ANAND, MSC (MicroSave Consulting)
  • Anya BEREZHNA, Symbiotics


Moderator Mohammad Abdul AWAL opened the session by reminding the audience that Bangladesh is called the World’s Capital of Microfinance. He continued by depicting the current situation of financial inclusion in Bangladesh. The country is a rapidly growing economy, accompanied with rapid poverty decline and social development. Around 52% of Bangladeshis have access to financial inclusion, served by an estimated 750 licensed MFIs throughout the country with a USD 187.5 billion loan portfolio. The contribution of savings and long-term deposits of microfinance clients to the loan portfolio is around 37%. 

One of the core methodologies of financial inclusion in Bangladesh has been national digitisation, which includes the development of payment systems through internet banking, electronic and mobile fund transferring system and e-commerce. About 34% of Bangladeshis enjoy multi-dimensional banking services. 

Approximately 79% of microfinance recipients are under the coverage of informal life and cattle insurance, continued Awal. Currently, microinsurance has not yet been allowed in Bangladesh due to different opinions between insurance regulators and the microfinance regulator authority. However, Awal was positive that microinsurance will soon be introduced in Bangladesh.


Abhishek ANAND was first to present and set out the opportunities and challenges for digital transformation of MFIs, as based on the outcomes of a study MSC conducted in 2018. His key message was that digital transformation is essential for MFIs to remain competitive and better serve their clients.

Anand explained that MFIs face fierce competition. Banks now use mobile FSPs and FinTechs to provide loans to those loan segments they did not cater before. In addition, the amount of credit given through agent banking increased by 65% in the past year. However, given the strong digital infrastructure in Bangladesh, it is an opportune time for MFIs to upgrade their systems and processes in order to stay competitive in the market. 

Anand explained that at sectoral level, digital transformation efforts have started in Bangladesh. Most of the surveyed MFIs have migrated to a web-based, real-time loan management system and centralised database. Although basic technology systems might be in place, Anand explained that the adoption of new digital technologies (like cashless loan disbursements) is still limited to pilots. 

According to Anand, the key challenges for MFIs towards meaningful digital transformation are centred around operational challenges (e.g. heavy cash management), gaps in existing technology (e.g. adequate systems for data backup and data security) and high investment costs. Also, regulatory limitations have impeded the digital transformation of MFIs, such as the lack of access to the national identity database. 

Anya BEREZHNA, Symbiotics, then took the stage and explained how the financial environment of Bangladesh impedes or facilitates the work of a foreign impact investor. She stated that, although Bangladesh is a challenging environment for foreign investors, there is potential to provide funding to MFIs. She stated that investors should be more present in Bangladesh, given the growing economy and changing demographics.

Challenges, however, revolve around the structure of Bangladesh’s MFIs and regulatory approvals. Regarding the structure of MFIs, Berezhna pointed out that all MFIs in Bangladesh are NGOs, meaning there is no shareholder structure. MFIs also write all their activities under one balance sheet, which makes it impossible to assess their microfinance operations. Regarding the regulatory environment, she stated that investors have to deal with the microfinance regulatory authority and the central Bangladesh bank, which results in long delays for securing approvals from respective entities. Besides, Berezhna explained that Symbiotics never got approval for providing local currency in Bangladesh. 

Then Guy STUART, Microfinance Opportunities (MFO), took the floor. He informed the audience about MFO’s Garment Worker Diaries studies, which provide a picture of the daily lives of garment workers in Bangladesh and focus on their earning and spending habits, and their living and working conditions. Stuart said that about a quarter of the entire garment workers population gets their wages paid digitally, with a push for full wage payment digitalisation for everyone. 

Stuart stressed that so far workers do not get enough training on digital payment. Almost everyone cashes out their full payments within 24 hours to a week, indicating that there is not yet a digital ecosystem emerging. Also, people often need an agent to get money out of an ATM and women fear that they lose control of their income. As such, he continued, there is a serious need to educate people on how they can have full control over digital money.

Tanvir Rahman DHALY, BRAC, stated that it is crucial to understand your clients, when you talk about financial inclusion. As such, he continued, BRAC offers customised products designed to serve distinct population segments. One of these products is the Ultra Poor Graduation model, which is replicated in 17 other countries around the world. This model is used as government intervention for social security and as a social support system for the ultra-poor population.

Dhaly stated that financial inclusion is not just about giving credit but about setting up a strategy around (digital) financial services, which should integrate the dynamics of a growing population. As such, BRAC has focused on creating employment opportunities through trainings and the establishment of youth-led enterprises in local communities. The future of microfinance in Bangladesh, he continued, also revolves around the integration of digital financial services, to enhance efficiency and better understand clients. There is a huge interest by the government to make the country digital by 2030, Dhaly said, which made him conclude that he is confident that the journey towards a digital ecosystem will fast-forward in the next 5-10 years.