Published: 10:52 AM, 13 September 2026
Digital lending can widen access to formal credit in Bangladesh: Experts
Digital lending could significantly expand financial inclusion in Bangladesh by making formal credit more accessible, affordable and convenient for underserved segments of the population, financial experts and sector leaders said at a seminar on Wednesday.
They made the observations at a seminar titled “Digital Loans for Financial Inclusion: Prospects and Challenges for Bangladesh,” organised by the Bangladesh Institute of Bank Management (BIBM) at its auditorium in Mirpur.
A research team presented a keynote paper at the event, analysing the prospects, challenges and future direction of digital lending in Bangladesh.
Md. Nehal Ahmed, Selection Grade Professor at BIBM, presented the keynote paper. The research team comprised Dr. Md. Shahid Ullah, Associate Professor at BIBM; Ms. Rexona Yesmin, Assistant Professor at BIBM; Md. Emon Arefin, Lecturer at BIBM; and Abrar Shahriar, Head of eLending, Products, Acquisitions & Bancassurance at City Bank PLC.
According to the study, digital lending can make small-ticket loans commercially viable by reducing transaction costs, overcoming geographical barriers and using digital and alternative data to assess borrowers who lack conventional credit histories.
The study estimated that operating costs for digital lending can be less than 1–2 percent of those associated with traditional lending, highlighting its potential to improve efficiency and expand access to smaller borrowers.
Although digital loans account for a substantial share of retail loan disbursements and loan accounts, their share of the overall outstanding loan portfolio remains relatively small, the study found.
It said the default or classification ratio of digital loans is currently around 3–4 percent. Rural borrowers account for approximately 30–40 percent of observed digital borrowers, while repeat borrowers represent 45–60 percent. Female participation, however, varies considerably across institutions, ranging from 3 percent to 25 percent.
The researchers said digital lending could particularly benefit underserved households, microentrepreneurs, farmers, women and micro, small and medium-sized enterprises (MSMEs), for whom access to conventional bank credit remains difficult.
However, the study cautioned that financial inclusion should not be measured by loan volumes alone. Credit quality, affordability, sustainability and responsible borrowing should also be considered in assessing the effectiveness of digital lending.
Speaking as the chief guest, Dr. Md. Habibur Rahman, Chairman of the BIBM Executive Committee and Deputy Governor of Bangladesh Bank, said digital lending could help reduce barriers to formal credit for small borrowers and underserved groups.
He, however, stressed the importance of ensuring that the sector expands in a responsible and sustainable manner so that increased access to credit does not create new financial risks.
Dr. Md. Ezazul Islam, Director General of BIBM, who chaired the seminar, said technology could significantly reduce lending costs and shorten turnaround times, but warned that rapid expansion of digital credit could also intensify risks.
These risks include over-borrowing, credit risk, data misuse, fraud and consumer harm, he said.
“The way forward is not to choose between innovation and regulation, but to make the two reinforce one another,” Dr. Ezazul Islam said.
He called for proportionate regulation, real-time credit information systems, stronger AI governance, robust cybersecurity measures and greater digital-literacy initiatives to support the sustainable development of digital lending.
The study noted that Bangladesh has already established a strong foundation for digital financial services through mobile financial services (MFS), agent banking, e-KYC and digital payment systems.
Despite this progress, digital lending remains largely concentrated in nano-loans and bank-led or bank-MFS partnership models, it said, suggesting considerable room for further expansion.
The seminar began with a welcome address by Md. Shihab Uddin Khan, Professor and Director at BIBM.
The designated discussants were Md. Ali Hossain Prodhania, Supernumerary Professor at BIBM; Debdulal Roy, Executive Director of Bangladesh Bank and Senior Faculty at BIBM; Ahmed Rashid Joy, Additional Managing Director and Chief Risk Officer at BRAC Bank PLC; and Md. Ashanur Rahman, Deputy Managing Director and Chief Economist at City Bank PLC.
