Shaping a sustainable microfinance sector in Bangladesh through MSC’s transformation feasibility study

• Sep 8, 2025
• 2 min

Bangladesh’s vibrant microfinance industry has long powered grassroots entrepreneurship. However, the industry needed to shift to a stronger, prudential oversight and diversified funding for its continued expansion. Business Finance for the Poor in Bangladesh (BFP-B) engaged MSC to assess the feasibility of converting leading NGO-MFIs into regulated microfinance banks or finance companies. This would transform financial inclusion with far-reaching implications.

MSC adopted a 360-degree diagnostic approach. We consulted the central bank, microfinance regulators, commercial banks, investors, and industry associations to gauge regulatory readiness and market appetite. We also conducted in-depth institutional assessments across representative MFIs to analyze product portfolios, capital structures, governance, and digital capabilities. Market-sizing and scenario modelling quantified current balance-sheet strength, projected growth, and the potential influx of commercial funding post-transformation.

Our analysis surfaced four critical success factors. These include balanced ownership structures that safeguard social missions, expanded access to wholesale and retail deposits, diversified products tailored to evolving client needs, and robust risk-management systems. MSC crafted a pragmatic transformation roadmap that outlined licensing pathways, phased capitalization plans, regulatory amendments, and capacity-building priorities based on these insights.

The study equips BFP-B, policymakers, and sector leaders with actionable guidance to modernize Bangladesh’s microfinance landscape. This will unlock larger, more sustainable sources of capital and deepen outreach to underserved communities.

Business Finance for the Poor in Bangladesh (BFP-B) commissioned this project. BFP-B project was commissioned to help the central bank frame a conducive policy and regulatory environment supportive to MSME development and to introduce credit guarantee scheme for micro and small enterprises.