Knowledge Hub

Our studies are providing the Bangladesh government with the researching findings needed to improve financing policy for small businesses. We publish research reports and policy briefs on this website and our social media channels.

 

National Financial Inclusion Strategy:

Bangladesh being a leading member of AFI committed internationally in 2014 to develop “National Financial Inclusion Strategy” (NFIS) for Bangladesh as part of signatory of Maya Declaration. This commitment was reiterated in 2015 during the Bangladesh visit of Her Majesty Queen Máxima of the Netherlands by the capacity of UN Secretary-General's Special Advocate for Inclusive Finance for Development (UNSGSA). For stepping toward sustainable fi­nancial inclusion, Bangladesh needs developing its own ‘National Financial Inclusion Strategy’ onward. Accordingly, Bangladesh Bank and Ministry of Finance took an initiative to develop a complete draft of NFIS for Bangladesh with the support from the UK Government (as part of BFP-B project funded by UK aid).

 
 

Policy Study: Cluster and Value Chain Financing for MSEs in Bangladesh

This study aims to define interventions that are required to address the challenges for cluster and value chain development and financing and define the role of key finance sector actors. It also provides recommendations to policy makers to develop a more effective policy environment to promote cluster and value chain development and financing in the short, medium and long term.

 

Policy study: Mobile Financial Services for MSEs in Bangladesh

This study identifies key challenges and opportunities to address access to finance of MSEs by mobile financial service providers. This study includes primary and secondary research and a detailed review of existing literature on use of MFS in Bangladesh.

 
 
 

Policy study: Diagnostics of Micro-enterprise Lending by MFIs in Bangladesh

This research identifies constraints to developing micro-enterprises, especially relating to financing issues. It outlines strategies for promoting and developing micro-enterprises, constraints they face, their current financial and capital structure, intensity of access to different credit markets. It also provides estimates of projected demand for micro-enterprise credit, and it suggests policy options for improving accessibility of micro-enterprises to credit markets. The potential of banks and microfinance institutions in financing of micro-enterprise has particularly been examined in the study. 

 
 
 

Policy Study: Review of SME Credit-related Policies of Bangladesh Bank Areas of further improvement with a focus on Micro and Small Enterprise (mSE) Finance

This study examines stakeholder perspectives and experience of using the mSME and SME Policy of BB. It recommends a suitable definition of mSMEs that may contribute towards formulation of an SME strategy document of the Ministry of Industry, and MRA’s attempt to define micro-enterprises. It also appraises the feasibility of developing two separate policies for financing of different enterprise segments. It also recommends further improvements of Bangladesh Bank’s current SME Policy, which is presumed to include micro-enterprises as well.

 
 

Innovative mse: financing products and delivery channels in BANGLADESH

The aim of this study was to understand the regulatory barriers in launching, operationalising, pilot-testing and up-scaling of innovative financing products and delivery channels, by considering the regulator's views on the sustainability or lackings of new or existing regulations. The study reviewed the experiences of the awardees of Challenge Fund (CF), and identified regulatory barriers some of the awardees are facing to implement and conduct business.

 
BFP-B innovative MSE financing.png
 
 

Feasibility study on transformation of MFIs

Microfinance sector in Bangladesh can play a larger role in deepening and broadening financial inclusion; serve more underserved customers and fill gaps for existing as well as potential new customers. This is possible through a transformation into a better capitalised and well-regulated form.

The regulators may amend the existing banking law or draft new legislation incorporating special conditions. The Bangladesh Bank may calibrate the transformation process and cushion the transformation shocks in MFIs while strengthening the regulatory rigour over a few years, rather than from the inception of the new entities. Transformation is more suited for the larger MFIs which can mobilise the capital from socially oriented investors and expand the business. The smaller MFIs have the option to continue as MFI and work towards achieving eligibility for transformation.

 
BFPB feasibility study on transformartion of MFIs into specialised banks.png
 
 

Addressing market demand through agent banking: lessons learnt

This policy brief has been prepared by extracting key findings from a study, titled “Addressing Market Demand through Agent Banking: Lessons Learnt”. The study was conducted in August, 2018. This brief summarises the rationale of agent banking prospects, identifies barriers to agent banking, understands the current financial landscape, and analyses the existing policies in Bangladesh. The brief also seeks to understand the use of agent banking by customers and explore the opportunities available to regulators, policymakers, and industry players to address the bottlenecks associated with the proliferation of agent banking.

 
BFPB market demand through agent banking .png
 
 

Case studies of our investments

Hishab: Voice-based service to help small businesses with record-keeping and credit management

In Bangladesh, small businesses such as grocery stores and local vendors lose a lot of money due to a lack of reliable book keeping. 41-43% of retail sales are on credit, and these transactions are recorded in handwritten ledgers. At least 3% of these credit sales become unrecoverable every year due to disputes. Read how Hishab's voice-based mobile phone service enables users to record transaction via phone calls.

i-SME: helping small businesses in Bangladesh prepare for loans

Micro and small enterprises (MSEs) often struggle to access finance from formal financial institutions. These businesses lack, for instance, organised financial data, legal documents, proof of repayment ability, credit rating, and financial literacy to be eligible for bank loans. Meanwhile, the transaction cost for financial institutions to reach out to these MSEs is very high, so they miss out on a big market. The i-SME project acts as a virtual “match-maker” between lender and borrowers to address these challenges.

Dutch-Bangla Bank Limited Agent Banking

Affordable financial services that meet small businesses’ requirements often do not reach millions of small businesses due to geographical dispersion, high transaction cost, and limited offering of products and services. Currently there are roughly 6 bank branches for every 100,000 rural adult citizens in Bangladesh.  The Dutch-Bangla Bank Limited Agent Banking model extends banking services to the unbanked population through agent outlets across Bangladesh.

 
 

ShopUp: Online platform to appraise credit worthiness of small businesses for financial institutions

Small businesses across Bangladesh are joining the country’s vibrant, rapidly evolving online market at an increasing rate, but opportunities to expand remain limited. To help these businesses scale, Bangladeshi startup Shopfront Limited launched ShopUp, a cart management system with an e-loan platform. Read how ShopUp is helping Bangladeshi entrepreneurs to access loans from microfinance institutions.

i-SME: Helping small businesses graduate from microfinace to bank loans

The i-SME initiative, launched by the Bangladesh SME Corporation with co-investment from the Business Finance for the Poor in Bangladesh programme, is playing an important role in helping small businesses use micro-loans to achieve higher amounts of bank financing at lower costs.