Bangladesh Bank’s initiatives: Financial inclusion and opportunities for the marginalised

Access to affordable finance remains a major obstacle for small entrepreneurs, low-income professionals and disadvantaged communities in Bangladesh. Many cannot obtain bank loans because they lack collateral, adequate documents or regular income records. Consequently, they depend on informal lenders, often at significantly higher costs, limiting their opportunities for economic improvement.

To address these barriers, Bangladesh Bank has introduced two complementary refinancing initiatives: a Tk 15 billion fund for small entrepreneurs and marginalised groups, and a Tk 1 billion E-Loan Refinance Scheme. Together, these initiatives aim to expand affordable financing, promote self-employment, support small businesses and bring underserved communities into the formal financial system.

Under the Tk 15 billion scheme, participating banks will receive refinancing from Bangladesh Bank at 1 per cent annual interest and provide financing to customers at a maximum annual interest or profit rate of 7 per cent.

Individual borrowers can receive up to Tk 1 million, while group loans can reach Tk 4 million. Loans of up to Tk 500,000 require no collateral. The repayment period is up to five years, with a possible grace period of six months.

Farmers, small traders, low-income professionals, women entrepreneurs, students, expatriate families and disaster-affected people will receive priority. Persons with disabilities, people with special needs and members of the third-gender community are also eligible. Importantly, at least 25 per cent of total disbursement must be allocated to women.

The scheme covers diverse occupations, including fishermen, tailors, cobblers, carpenters, potters, blacksmiths, rickshaw and van drivers, shopkeepers, street vendors, tea sellers and plumbers. Poultry and livestock farmers, mobile financial service agents, freelancers, nursery owners, weavers, handicraft producers and cottage-industry entrepreneurs are also eligible.

Marginal and landless farmers, particularly Farmer Smart Card holders, will receive priority, although farmers without such cards must not be excluded. People affected by river erosion, cyclones, floods, drought and other disasters, as well as residents of coastal areas, chars and haor regions, ethnic minorities and disadvantaged communities, are also covered. Returned migrant workers and remittance-receiving families will receive priority.

Financially disadvantaged students up to 25 years of age with Student Banking accounts can obtain financing for vocational, technical and IT training, higher education, including MBBS, BDS and engineering studies, and essential educational materials. A guardian's repayment guarantee is required.

For group financing, two to five individuals must form a group. Each member can receive up to Tk 800,000, subject to a combined ceiling of Tk 4 million. All members are jointly and individually liable for repayment.

Applicants must maintain a bank account, which can be opened with Tk 10, Tk 50 or Tk 100. Banks may require reasonable collateral for loans exceeding Tk 500,000 and may use Bangladesh Bank's Credit Guarantee Scheme for loans of Tk 25,000 or more. No CIB report fee can be charged for loans or investments up to Tk 300,000.

Financing can be distributed through branches, sub-branches, agent banking, mobile financial services and digital platforms, with regular monitoring of utilisation and recovery.

Complementing the larger fund, the Tk 1 billion E-Loan Refinance Scheme aims to make small-scale financing accessible through digital channels. Introduced in 2022 as the Digital Microcredit Refinance Scheme, it was recently renamed by Bangladesh Bank's Financial Inclusion Department.

Eligible customers can receive up to Tk 50,000 at a maximum annual interest or profit rate of 9 per cent, while participating banks receive refinancing at just 1 per cent. The fund will remain operational until 30 June 2028. Its revolving nature allows recovered funds to finance additional borrowers.

Priority groups include remote-area residents, marginalised women, small women entrepreneurs, disadvantaged students aged 18–25 with Student Banking accounts, persons with disabilities and members of the third-gender community.

The entire lending process, including registration, disbursement and repayment, is digital. Banks can use internet banking, mobile banking applications, mobile financial services and e-wallets. The maximum repayment period is 12 months, with interest or profit calculated on the declining balance.

This approach can reduce paperwork, transaction costs and branch visits, particularly benefiting people with limited access to conventional banking.

Both initiatives offer commercial banks opportunities to expand their outreach through relatively low-cost refinancing. However, participation requires proper institutional arrangements, borrower assessment and effective monitoring.

For the E-Loan Scheme, banks must complete the pilot programme under BRPD Circular No. 11/2026, adopt a board-approved Policy and Procedure Guideline (PPG), and sign a participation agreement with Bangladesh Bank's Financial Inclusion Department.

Participating banks remain liable to Bangladesh Bank for refinancing even when borrowers default. Therefore, low-cost funding must be supported by responsible lending, sound credit assessment and effective risk management.

Shariah-based banks can also participate through approved Shariah-compliant investment modes, subject to maximum annual customer profit rates of 7 per cent under the larger scheme and 9 per cent under the E-Loan Scheme. Their established networks and Islamic financial expertise can help extend financing to women entrepreneurs, small traders, farmers and low-income communities.

Despite their potential, these initiatives face implementation challenges. Many prospective borrowers have limited financial literacy, inadequate business records and little experience with formal banking. Banks must simplify procedures, provide practical guidance and ensure that genuine beneficiaries are not excluded by unnecessary documentation.

Digital lending also involves risks, including over-indebtedness, cybercrime, data breaches and financial fraud. Customers must clearly understand financing costs, repayment obligations and the consequences of default. Strong cybersecurity, data protection, transparent pricing and effective complaint-resolution mechanisms are essential.

Success should not be measured merely by financing disbursed. It should be assessed through higher household incomes, sustainable micro-enterprises, employment generation and the number of underserved people brought into formal finance.

Bangladesh Bank's Tk 15 billion refinancing fund and Tk 1 billion crore E-Loan Scheme offer complementary pathways to financial inclusion: one expands access to larger collateral-free financing, while the other brings small-scale credit to digital platforms.

Ultimately, their value will depend not on how much money is distributed, but on the economic opportunities created. With responsible lending, effective supervision, customer protection and active bank participation, these initiatives can transform marginalised communities into productive contributors to the national economy.

* Md. Khairul Hasan is a banker and freelance writer.