Financial inclusion landscape in Bangladesh

Financial inclusion has emerged as a cornerstone of development policy, not only as a means of economic empowerment but also as a pathway toward social equity and sustainable growth. In developing economies, expanding access to formal financial services is increasingly recognized as a vital driver of inclusive development. Financial inclusion empowers individuals to save, invest, and manage risks, thereby fostering entrepreneurship, increasing resilience, and reducing poverty. Central banks, as guardians of monetary and financial stability, are uniquely positioned to champion inclusive finance. Through regulatory oversight, policy innovation, and coordination with stakeholders, they can steer the financial system to be more accessible, affordable, and responsive to the needs of underserved populations. Bangladesh Bank (BB), the country’s central bank, has been at the forefront of this agenda, adopting a proactive, multidimensional approach to enhance financial inclusion since the early 2010s.
Recognising the transformative role of finance in enabling inclusive growth, BB has launched a broad spectrum of initiatives: promoting mobile financial services (MFS), developing agent banking frameworks, expanding SME and agricultural credit through refinancing schemes, spearheading financial literacy campaigns, and crafting targeted strategies for vulnerable groups including women, youth, and climate-affected populations.

Beyond its immediate economic impact, financial inclusion is now widely acknowledged as a key enabler of the United Nations Sustainable Development Goals (SDGs). It plays a direct role in advancing SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities), while supporting other goals through indirect channels such as food security, health, and education. As such, the pursuit of inclusive finance is no longer a sectoral initiative—it is a cross-cutting priority in the global development agenda.

In the SAARC region, or South Asia, where economic and social structures share considerable similarities, challenges to financial access—such as rural remoteness, gender disparity, and digital divides—are common. In this context, central banks play a critical role not only at the national level but also as enablers of regional cooperation. By sharing knowledge, harmonizing regulatory frameworks, and initiating joint platforms, SAARC member states can advance cross-border financial inclusion.
Bangladesh’s experience provides valuable lessons for the region. Its emphasis on technology enabled inclusion, regulatory flexibility, and stakeholder engagement can inform and inspire similar efforts across neighboring countries.

Objectives of the paper: Against this backdrop, the present paper seeks to review Bangladesh’s financial inclusion landscape through the lens of central banking, drawing insights for national progress and regional collaboration. The specific objectives are to: (i) Review the progress and key milestones in Bangladesh Bank’s financial inclusion journey; (ii) Highlight the institutional and regulatory approaches that have contributed to inclusive finance outcomes; (iii) Identify the remaining gaps and challenges—both structural and operational—in the national context; and (iv) Propose policy directions for strengthening national strategies and enhancing regional cooperation on financial inclusion.

Definition

Bangladesh defines financial inclusion as the access and usage of a full range of quality financial services by individuals and businesses—including the unserved and underserved—through regulated providers. These services should be delivered affordably, efficiently, and responsibly, supported by technology, in a transparent and competitive marketplace. This approach emphasises not just availability, but regular and meaningful use of financial services to support livelihoods, manage risks, and contribute to inclusive economic development. (National Financial Inclusion Strategy, 2021-26, Ministry of Finance, Government of Bangladesh)

Financial Inclusion Landscape in Bangladesh

Bangladesh’s financial inclusion journey has seen remarkable progress in recent years, positioning the country as a role model in expanding access to formal financial services. Driven by Bangladesh Bank’s proactive policies and regulatory frameworks, the country has made notable strides in reaching underserved populations, particularly in rural areas, and promoting financial resilience through inclusive and innovative solutions.

As of March 2025, the financial inclusion landscape in Bangladesh is characterised by an extensive and growing network of bank branches, sub-branches, agent banking outlets, microfinance institutions, mobile financial services (MFS) providers, and capital market intermediaries. The expansion of digital platforms, including mobile and internet banking, alongside the proliferation of no-frill and specialized accounts, has broadened access to essential financial services for millions of individuals and businesses across the country.

Building on the overview provided, the following sections will delve into a detailed analysis of key channels and mechanisms that have contributed to advancing financial inclusion in Bangladesh. These include Mobile Financial Services, sub-branches, Agent Banking, No-Frill Accounts, Microfinance, and the broader digital transformation of financial services. Each section will examine the growth, achievements, and remaining challenges within these areas, providing insights into their roles in shaping Bangladesh’s inclusive financial landscape and highlighting lessons for the SAARC region.

To contextualise the reach and relevance of financial inclusion efforts, this report draws on population data from the 2022 Population and Housing Census conducted by the Bangladesh Bureau of Statistics (BBS). According to the Population and Housing Census 2022 conducted by the BBS, the adjusted population of Bangladesh stood at 169.83 million, while the enumerated population was recorded at 165.16 million. Out of a total of 165.16 million people, males account for approximately 81.77 million, representing 49.52 per cent, while females number around 83.38 million, making up 50.49 per cent of the population.

The population aged 15 years and above accounts for approximately 117.19 million (enumerated), which translates to an adjusted total of around 120.5 million when census correction factors are applied. This group forms 70.9 percent of the adjusted population. Out of the total population of 169.83 million, an estimated 116.07 million people (68.34 percent) reside in rural areas, while 53.76 million people (31.66 percent) live in urban areas.

Digital Financial Services and Access

Modern and inclusive payment systems are key to expanding access to financial services. In Bangladesh, the Payment Systems Department of Bangladesh Bank has led major reforms to enhance financial inclusion through secure, efficient, and accessible digital payment infrastructure. Key systems like the Bangladesh Electronic Funds Transfer Network (BEFTN) and Bangladesh Real Time Gross Settlement (BD-RTGS) enable faster and more reliable fund transfers across banks. The introduction of Mobile Financial Services (MFS) in 2011 has been transformative, offering millions—especially in rural and low-income areas—access to payments, remittances, and government transfers without needing a traditional bank account.

Interoperability through the National Payment Switch Bangladesh (NPSB) and regulation of Payment Service Providers (PSPs) and Payment System Operators (PSOs) have further supported digital financial inclusion and innovation. Together, these systems form the backbone of Bangladesh’s strategy to reach underserved populations and promote a more inclusive financial ecosystem.

Mobile Financial Services

Mobile Financial Services (MFS) have played a transformative role in advancing financial inclusion, particularly in Bangladesh. By leveraging the widespread use of mobile phones, MFS platforms have provided millions of individuals and businesses with secure, real-time access to payments, savings, credit, and insurance, often for the first time. This shift has been supported by a robust regulatory framework, public-private partnerships, and continuous innovation. MFS has facilitated government-to-person payments, including social safety nets, with greater efficiency and transparency. Its role in empowering women, micro-entrepreneurs, and rural populations is significant, enabling financial resilience and inclusion.

The share of active mobile money accounts, expressed as a percentage of the total population, has expanded significantly in Bangladesh between 2019 and 2024. [The analysis presented in this report uses population data based on the adjusted total population of 169.83 million, as reported in the 2022 Population and Housing Census by the Bangladesh Bureau of Statistics (BBS). Additionally, figures on active Mobile Financial Services (MFS) accounts may include instances of multiple accounts held by a single individual. As such, the estimated penetration rates reflect the number of active accounts relative to the total population and do not necessarily represent unique users.]

The share of active mobile money accounts, expressed as a percentage of the total population, has grown significantly in Bangladesh between 2019 and 2024. This reflects not only access but also the active use of digital financial services.

From 29 per cent in December 2019, the share rose to 36 per cent by December 2021, followed by a climb to 54 per cent by December 2024. This strong upward trajectory underscores meaningful progress in digital financial inclusion, driven by increased smartphone adoption, interoperable payment platforms, and targeted outreach initiatives. The rapid expansion highlights the impact of coordinated efforts by regulators, financial institutions, and mobile network operators in fostering trust, convenience, and usability in mobile financial services (MFS). To sustain this momentum and close remaining inclusion gaps, continued policy support, robust consumer protection measures, and digital literacy campaigns will be essential.

The chart-2 reflects a sustained and inclusive expansion of digital finance across both urban and rural areas. Between 2019 and 2024, the rural population consistently accounted for the majority of active MFS users, underscoring the role of mobile platforms in bridging financial access gaps outside metropolitan centres. In 2019, rural users comprised 62.2 per cent of active MFS accounts, while urban users made up 37.8 per cent, reflecting a 24.4 percentage point (pp) gap in favor of rural areas. By 2024, the rural share decreased to 54.9 percent, while the urban share increased to 45.1 percent, narrowing the urban-rural gap to just 9.8 pp.This represents a 17.2 pp shift over five years, indicating a faster growth rate in active urban usage relative to rural areas which indicates that mobile financial services continue to serve as a critical access point for underserved populations in non-urban areas.

Internet Banking

The chart-3 indicates a steady expansion in the number of Internet banking accounts from December 2019 to March 2025. Growth rose from 25.36 per cent in 2019 to 43.82 per cent by March 2025, reflecting increasing digital adoption across the banking sector. This upward trajectory highlights the impact of policy support for digital financial services, improvements in ICT infrastructure, and growing consumer demand for convenient banking channels. While growth accelerated between 2019 and 2022, it moderated slightly in 2023 (33.06 per cent), before picking up again through 2024 and into early 2025.

Issued Cards

As of March 2025, 30.11 per cent of Bangladesh’s total population is covered by issued cards, including debit, credit, and prepaid instruments. These cards provide access to digital financial services, enhancing transactional capabilities, online banking, and financial security for individuals. The steady increase in card coverage from 10.97 per cent in June 2019 to 30.11 per cent underscores notable progress in advancing digital financial inclusion and broadening access to formal financial systems. However, the data also reveal that approximately 70 per cent of the population remains excluded from card-based financial services, emphasising the need for sustained policy efforts and targeted interventions to ensure inclusive access to financial services for all segments of society (chart-4).

Online Coverage of Bank Branches and accessibility

There is a progressive digital transformation of banking services in Bangladesh, with urban branches reaching 100 per cent online by June 2023, and rural branches achieving full digital integration even earlier, by June 2021, demonstrating Bangladesh’s successful drive towards inclusive digital banking.
The commercial bank branches per 100,000 adults are used to assess the physical outreach of formal financial institutions. In Bangladesh, this indicator has shown a gradual upward trend from 6.07 in June 2019 to 6.70 by March 2025, reflecting modest but consistent expansion in branch-based financial access across both urban and rural areas.

To drive financial inclusion further banks are increasingly extending their services by expanding networks and services through sub-branches and agent outlets, rather than opening new full-fledged branches, as a cost-effective strategy to expand their outreach. Therefore, branches per 100,000 adults should be studied considering existence of robust sub-branches and agent outlets network.

Conventional Banking Access: Conventional banking— comprising physical branches, deposit accounts, and credit services —has been instrumental in promoting financial inclusion in Bangladesh. The expansions of bank branches and tailored financial products, such as no-frill accounts, have significantly improved access to formal financial services, especially for rural and underserved populations. According to Bangladesh Bank, the number of commercial bank branches increased from 10,375 in 2018 to 11,362 in 2024, enhancing physical accessibility to banking services (Table-1).

Overview of Conventional Bank Branches

The period from 2019 to 2024 witnessed steady expansion and enhanced outreach within Bangladesh’s financial sector, characterised by the growth and consolidation of commercial banks (CBs) Over these six years, the number of commercial banks increased slightly from 59 to 61, reflecting a stable yet gradually diversifying banking landscape. Commercial banks expanded their branch network consistently, with branches growing from 10,568 in 2019 to 11,362 in 2024, thereby improving physical access to financial services across the country. This expansion was complemented by a significant increase in deposit accounts, which surged from 109.79 million in 2019 to 156.12 million in 2024, underscoring notable progress in financial inclusion and savings mobilisation. Loan accounts in commercial banks also showed a positive trajectory, increasing from 11.05 million in 2019 to a peak of 13.18 million in 2023, before a slight decrease to 13.05 million in 2024, and 13.44 million in March 2025, reflecting sustained credit availability to households and businesses amid evolving economic conditions (Table-1).

No Frill Accounts

In pursuit of inclusive financial access, the Bangladesh Bank (BB) has mandated banks to provide no-frill accounts (NFAs) targeted at marginalized populations, including farmers, low income workers, and social safety net beneficiaries. These accounts can be opened with initial deposits as low as Tk 10, 50, or 100, and are exempt from minimum balance requirements and service fees, ensuring broad accessibility. To promote financial well-being among low-income groups, these accounts offer preferential interest rates exceeding standard savings rates.

Complementing this initiative, School Banking Accounts (SBAs) enable students under 18 to open savings accounts with an initial deposit of BDT 100, fostering early financial literacy and inclusion. As of March 2025, the number of Tk 10 farmer accounts stands at 9.75 million, with a dominant share in rural regions (7.43 million). As of March 2025, No-Frill Accounts have reached over 28 million, holding nearly Tk 48.9 billion in deposits. Significant portions serve social safety net beneficiaries (37 per cent), farmers (37 per cent), and the extreme poor (12 per cent). Remittances through these accounts total Tk 7.8 billion, highlighting their vital role in financial inclusion(Quarterly Report on No-Frill Accounts, Bangladesh Bank).

School Banking

Between FY2019 and March 2025, the total number of School Banking Accounts (SBAs) increased from 1.74 million to 4.43 million, representing a growth of 154 per cent over the period. Urban student accounts grew from 1.07 million in FY2019 to 2.08 million by March 2025. Meanwhile, rural student accounts expanded from 0.67 million to 2.34 million, surpassing urban growth in absolute terms. This shift highlights improved access to banking services in previously underserved rural regions. The rural share of school banking accounts rose from 39 per cent in FY2019 to over 53 per cent in March 2025, indicating significant progress in narrowing the geographic financial access gap among youth. This transition is attributed to Bangladesh Bank’s continuous monitoring for the implementation of policies related to ‘School Banking’ and ‘School Banking Conference’.

Bangladesh Bank is hopeful that the growth of SBA will be accelerated in future as recently it has issued a directive for Banks in March 2025 where each branch required to engage with at least one nearby educational institution. Latest data shows in 03 months 5542 branches have already engaged with at least one or more educational institutions as an impact of this intervention. The implementation of digital banking tools, school banking conferences, and collaboration with the National Curriculum and Textbook Board (NCTB) to integrate financial literacy into school curricula further contributed to the observed uptake.

Bangladesh holds significant potential to enhance youth financial inclusion through its school banking initiative. From just over 8 per cent in 2018, the proportion of students with a school banking account has nearly doubled, reaching close to 20 per cent by 2023. This upward trend reflects growing awareness and institutional support for early financial access. However, with over 80 per cent of students still unbanked, there remains significant room for growth.

Agent Banking

Agent Banking means providing limited scale banking and financial services to the underserved population through engaged agents under a valid agency agreement, rather than a teller/ cashier.
It is the owner of an outlet who conducts banking transactions on behalf of a bank. This model expands access to financial services in areas where traditional bank branches are scarce or absent, providing services such as deposits, withdrawals, transfers, and microloans.

In Bangladesh, Bangladesh Bank has been instrumental in advancing agent banking as a tool for financial inclusion. By setting clear regulatory guidelines and promoting partnerships between banks and local agents, agent banking has created a decentralised network of service points. This model has significantly increased financial access, with over 80 per cent of agent outlets located in rural areas, ensuring that low-income and marginalised populations can participate in the formal financial system.

As of March 2025, rural areas continue to dominate agent banking in Bangladesh, with 85.54 per cent of accounts and 86 per cent of total outlets located in these regions . This distribution, largely consistent since FY19, reflects targeted policy interventions aimed at extending formal financial services to underserved populations and bridging urban-rural financial access disparities. The stability of these figures highlights agent banking’s role as a key instrument for rural financial inclusion.

Gender-disaggregated data shows a significant shift towards greater inclusiveness. While male accounts accounted for 62 per cent in FY19 and female accounts for 36 per cent, by March 2025 this gap has narrowed dramatically, with male and female accounts each comprising 49 per cent of total accounts, and 2 per cent for others.

Sub-Branch Banking

The number of bank sub-branches in Bangladesh increased steadily between December 2021 and December 2024, rising from 2,613 to 4,661—an overall growth of 78 per cent. This expansion reflects Bangladesh Bank’s emphasis on improving physical access to financial services, particularly in underserved and rural areas. The consistent growth trend also indicates strong compliance by commercial banks with regulatory encouragement to extend outreach through lower-cost banking infrastructure, such as sub-branches, rather than full branches. This has contributed significantly to deepening financial inclusion at the community level [To be continued]

Md. Iqbal Mohasin, Director, Financial Inclusion Department; Mohammad Mohidul Islam, Additional Director, Statistics Department; Salahuddin Mahmud, Joint Director, Payment Systems Department; and Saila Sarmin Rapti, Joint Director, Research Department; Bangladesh Bank, Head Office, Dhaka.
[This is the first part of the original paper titled Financial Inclusion and central banking: Bridging the gaps in South Asia. It was presented as country paper of Bangladesh in 47th SAARCFINANCE Governors’ Group Meeting and Symposium,
26 June 2025. ]