Microfinance Industry Report: Bangladesh

This paper reviews the microfinance sector in Bangladesh, and contributes to the Banking with the Poor Network's Asia Resource Centre for Microfinance. The industry is currently going through a phase of formalization and transformation.

Microfinance has been successful in Bangladesh, and MFI clients have demonstrated increasing demand for new loans and repeat loan requests. Features of Bangladeshi microfinance include:

• Market saturation in some parts of the country and evidence of unserved populations in others;
• Individual and collective expertise to develop appropriate products and manage high costs of delivering financial services to the unbanked;
• Government and central bank policies that encourage commercial banks to refinance the MFI sector;
• Establishment of Bangladesh Microfinance Regulatory authority and the MRA act to help in consolidating the industry and fostering growth.

The paper states that the success of Bangladeshi microfinance is also due to clients' credit culture, discipline and commitment towards maintaining regular repayment.