A study by MSC and Busara, supported by the Bill & Melinda Gates Foundation, examined how digital platforms impact microenterprises across four different geographies. In Bangladesh, platformed microenterprises experience higher income and profit. Sector, location, and gender influence platform usage and payment preferences, with a notable reliance on cash in rural areas and mobile money in urban settings. Women microentrepreneurs rely heavily on spouses for business decisions, which underscores the need for tailored financial inclusion strategies.
Read this country pullout document for detailed insights and recommendations to unlock the potential of these platforms for inclusive growth of microenterprises.
Imagine walking into a local fair price shop (FPS) and finding not just rice and wheat but a vibrant array of nutrient-rich foods, from fresh vegetables to fortified grains and pulses. This would be a dream come true for someone like Lakshmi, a mother of three from rural India who relies on her local FPS to feed her family. Every month, she visits the nearby FPS to collect rice and wheat. Yet despite this access, Lakshmi struggles to provide her children with a balanced diet, because of the rising prices of vegetables, lentils, and milk.
For millions like Lakshmi, India’s Public Distribution System (PDS) has been a lifeline ensuring access to staple foods. While it has successfully addressed caloric needs, it falls short in providing a diverse and balanced diet. The National Institute of Nutrition’s “What India Eats” report shows that people’s reliance on cereals leaves significant gaps in dietary diversity, with insufficient intake of essential foods, such as legumes, milk, and vegetables. These deficiencies are a pressing public health concern. But what if FPSs can offer more?
A recently launched initiative by Union Minister Pralhad Venkatesh Joshi seeks to transform the role of FPSs to address this issue. It involves a pilot project to convert 60 FPSs into ‘Jan Poshan Kendras’ across Gujarat, Rajasthan, Telangana, and Uttar Pradesh. These nutrition hubs are set to provide a wider range of nutrient-dense foods at affordable prices while creating new income opportunities for FPS dealers. Here is how this transformation can succeed to nourish the families of millions of Indians like Lakshmi:
1) Identification of nutrient-dense commodities: The first step is to decide which healthy food should be sold in these hubs. These items must be prioritized based on their nutritional value and ease of inclusion. Priority should be given to non-perishable items with high nutritional value and ease of storage, such as pulses, fortified foods, and oil. As supply chains mature, perishable items, such as fresh vegetables and dairy, can be gradually introduced.
Nutritional Value and Ease of Inclusion in FPSs
2) Establishment of efficient supply chain and market linkages: A well-organized supply chain is vital to get nutritious food into these shops. This can be done through partnerships with FMCG aggregators, farmer producer organizations (FPOs), ministries, and cooperatives. Moreover, these supply chains must be integrated with market linkages to provide farmers with a reliable outlet for their produce and allow FPSs to access fresh and diverse food items at affordable prices.
A centralized digital platform that organizes ordering, invoicing, and analytics can make the process smoother. This platform will allow FPS dealers to place orders with different aggregators, track inventory, and monitor sales. FPS dealers must receive training to navigate this digital interface.
3) Diversification of products for profitability: Apart from nutritious food, FPS dealers can also sell other everyday items, such as cleaning supplies and personal care products. This will attract more customers, increase sales, and improve their income, making the nutrition hub a more financially viable model.
4) Community awareness and engagement: The success of nutrition hubs will depend on how well communities understand and embrace them. Awareness campaigns should be launched to inform families about the benefits of balanced nutrition and the availability of healthy food at their local FPSs. Frontline workers, such as Accredited Social Health Activists (ASHAs) and Anganwadi workers (AWWs), can be vital to educate the community.
Monitoring the effectiveness of these campaigns will also be crucial to ensure that they reach the intended audience and lead to meaningful behavior changes.
Through strong partnerships, community engagement, and efficient supply chains, we can turn these shops into nutrition hubs that fight hunger and promote health and well-being. For Lakshmi and millions like her, this could truly be a nutritional revolution in the making.
Amina wants to transform her home-based craft business into a thriving enterprise in Dhaka. She is talented and pours her heart into every piece of her intricate, handcrafted jewelry. However, she has failed to expand her business as she cannot access credit because she lacks a trade license.
Although the regulator allows small-scale traders to open bank accounts without trade licenses, businesses cannot obtain credit from banks without a trade license. Their choices become limited to their informal network or the higher-priced MFI loans. The acquisition of trade licenses typically requires significant time, cost, and effort and involves several steps, which include the submission of the necessary documentation to the local city corporation or municipal authority. Moreover, the license must be renewed annually. Only since September 2023 has Dhaka South City Corporation started to issue five-year business licenses. The government expects to roll out a similar program countrywide soon.
We conducted a comprehensive study of CMSMEs through the Women Business Diaries project, supported by the Bill & Melinda Gates Foundation. This research identified several demand- and supply-side barriers that hinder women’s access to formal credit. Among these, the lack of a trade license was a significant obstacle for women entrepreneurs. Only 48% of entrepreneurs from our sample of 413 female and 76 male entrepreneurs had ever possessed a trade license. However, this proportion varies significantly between male and female entrepreneurs, as male entrepreneurs are more likely to have a trade license (p=0.000).
However, gender is not the only factor that affects a woman entrepreneur’s ability to obtain a trade license. Our research examined factors, such as business location, type of premises (home-based or separate), business scale, owner’s education level and age category, type of business, and engagement in activities, such as securing bank loans or conducting sales beyond the local market. We employed a statistical comparison of proportions with Bonferroni correction for this analysis.
Our analysis revealed that location, type of premises, and type of business were not statistically significant factors that affect women entrepreneurs’ possession of a trade license.
However, several other factors showed statistically significant differences in their association with the possession of a trade license, as listed below.
Business owners’ education level: Graduate or postgraduate women entrepreneurs are more likely to have a trade license than those who lack formal education (p=0.004) or have attained primary-level (p=0.004) or secondary-level education (p=0.044). Moreover, female business owners who lack formal education are significantly less aware of the trade application process than those who have received some education.
Business owner’s age: Younger women entrepreneurs are less likely to have a trade license than those in the middle age (p=0.020) or older age categories (p=0.000). This could be because they realize the benefits of a trade license as they gain business experience. Moreover, a trade license becomes essential when owners want to scale their business and avail of credit and other formal support.
Engagement in sales outside the local market: Women entrepreneurs who engage in sales outside their local market are more likely to have a trade license than those who only cater to their local market (p=0.016).
The scale of business: Women entrepreneurs with average monthly revenue of more than BDT 100,000 (USD 837) are more likely to have a trade license than those with average monthly revenues that range from BDT 25,000 (USD 209) or below (p=0.000), 25,001 to 50,000 (USD 209 to USD 418) (p=0.000), and BDT 50,001 to 100,000 (USD 418 to USD 837) (p=0.001). This can, in part, be because women entrepreneurs with smaller businesses that generate monthly average revenue up to BDT 25,000 (USD 209) were more likely to report being unaware of the requirement for a trade license.
Location of business: Similarly, female business owners in rural areas are more likely to be unaware of the trade license requirements than those in urban areas (p=0.009).
In our sample, 82% of the 43% of women entrepreneurs who have obtained a trade license currently have active or renewed licenses, and 86% have licenses registered in their names. Among the 51% who never applied, 59% expressed uncertainty about the need for a trade license, while 27% cited the burdensome paperwork as a deterrent. The following figure outlines other reasons for non-application:
Additionally, we found several ecosystem-level complexities. The annual renewal process often requires multiple visits to licensing offices, which can be difficult for women who lack their family’s support or must travel to urban areas to apply for the license. Further, the acquisition of a trade license often involves registration fees, renewal fees, and other administrative costs. It may often also involve bribes to intermediaries. These costs present a significant barrier. Such challenges highlight the need for more accessible and streamlined licensing procedures that accommodate the unique circumstances of women entrepreneurs in Bangladesh. The section below outlines four recommendations for stakeholders to ease the process of issuing trade licenses for women entrepreneurs.
Simplified processes to issue trade licenses: Countries, such as Singapore, New Zealand, the UK, and Australia, issue digital trade licenses in one to three steps. On the other hand, the acquisition of a trade license in Bangladesh requires seven to eight steps. Bangladesh may also consider the use of its national identity cards to issue trade licenses as several other countries currently do. The reduction of the steps to get a trade license will enable more businesses to move toward formalization.
Extended channels: The use of existing channels, such as NGOs, mobile financial service (MFS) agents, and banking agents, to support women in the trade license application process could improve access for women entrepreneurs. Additionally, the establishment of centers in rural areas could help women in underserved regions obtain and renew their licenses without traveling long distances to urban centers. This combined strategy will guide them throughout the application process and significantly enhance convenience and accessibility for women in business.
Subsidized application and renewal fees: Fees for trade licenses in Bangladesh range from BDT 100 to BDT 40,000 (USD 0.84 to USD 335). Relevant incentives, for example, discounted rates for timely renewals, could reduce financial barriers for women entrepreneurs and encourage more businesses to formalize their operations. Additionally, nudges, such as free renewals before the license expiry, will encourage more small businesses to opt for a trade license. Kenya has adopted a similar approach to push the formalization of its small businesses.
Awareness campaigns: Educational and outreach efforts can effectively inform women entrepreneurs about the benefits of obtaining a trade license, such as access to financial services, increased credibility, and legal protection. These efforts can feature success stories to demonstrate the advantages of formalized businesses, which would inspire others to follow suit. Additionally, the use of social media to guide women through the application process can create a supportive community for aspiring entrepreneurs.This approach promotes formalization and keeps women updated on developments, such as the government’s initiative to extend trade license validity.
This blog underscores that the trade license policy and approach must be reformed to promote women’s entrepreneurship in Bangladesh. The government can address the existing barriers and implement measures to facilitate greater participation of women in the formal economy. This would empower women and contribute to the broader economic growth and the successful graduation of Bangladesh from the Least Developed Country (LDC) status.
Women in Bangladesh own 37.2% of bank accounts and hold 33.5% of the country’s total bank deposits, per the Bangladesh Bank’s WFID Dashboard as of Q1 2024. Yet, they continue to grapple with significant barriers when they seek access to credit. They hold only 20% of bank loan accounts, which represents 19% of the total loans by value. The limited credit availability restricts women’s financial agency and business growth and undermines their potential contributions to economic growth.
MSC’s Women Business Diaries research, which involved around 500 business owners in Bangladesh, offers valuable insights into the development of gender-intentional products for women and women entrepreneurs. This two-part blog series discusses the challenges practitioners face in the creation of gender-intentional products and services.
We studied access to credit in-depth and spoke with multiple bankers from bank head offices, branches, and credit officers about their experiences and approaches to lending to women entrepreneurs. This blog summarizes our discussions with them and the challenges they face when they design financial products and services for women entrepreneurs.
Restrictive socioeconomic norms and cultural barriers that prevent interaction with female customers
Bankers acknowledge that social norms hinder women’s access to formal financial products and services. Women entrepreneurs often struggle with limited financial independence and decision-making power due to restricted mobility, lack of control over resources, and traditional gender roles that confine them to domestic responsibilities. While women may legally own businesses, male household members frequently make the financial decisions. A credit officer from a prominent bank observed that despite the establishment of dedicated women’s banking desks, interactions with female account holders are often dominated by male relatives, particularly in loan negotiations. Due to security concerns and social norms, bankers and female customers prefer to speak with the husbands or men in the household. This dynamic limits women’s ability to express their financial needs effectively. In many instances, it leads to a situation where women prefer to avoid the use of formal bank accounts altogether.
The dependence on men is not limited to interactions. A product manager notes that even when women seek credit independently, their limited collateral and credit history often require male relatives, who usually control family assets, to co-sign loans.
The implications of this dependence on men result in many more challenges. For example, it undermines bankers’ trust in women’s financial decision-making and business management skills. Further, bankers’ limited experience interacting with women complicates their ability to evaluate women’s business potential and design tailored financial products. For instance, savings bank accounts in Bangladesh often require a minimum deposit of at least BDT 10,000 (USD 84), which is prohibitive for marginalized women who have small and irregular savings. This forces them to store money informally, which increases the risk of loss or theft.
A lack of understanding of female customers also affects credit services. Most women know that banks require lengthy documentation and take time to process applications but are unaware of credit guarantee programs that could ease access. Only 31% of female business owners know about programs that facilitate access to credit. Furthermore, bankers assume women do not maintain business records, yet our study finds that 63% of women entrepreneurs keep inventory records, while 68% track income and expenses.
Lack of trained staff who can build an understanding of women’s customer segments
Moreover, more than 16% of women in banking left their jobs in 2023, which indicates a growing trend of female professionals who seek opportunities outside the sector. These statistics highlight a precarious environment where female customers have limited access to female staff for support and guidance and lack representation in leadership roles to advocate for their financial needs. As a result, banks are often perceived as male-dominated spaces and are not the first choice of cottage, micro, small, and medium enterprises (CMSMEs) when they apply for loans.
Most entrepreneurs want credit from banks. In our study, 72% of women and 76% of men seek credit from banks. However, microfinance institutions (MFIs) frequently outperform banks as they offer more accessible and relevant solutions focused primarily on female borrowers.
Poor implementation of policy measures that could enhance interaction with women entrepreneurs
Despite policymakers’ efforts, women in Bangladesh face barriers to financial inclusion, such as legal frameworks that restrict independent access to banking services or loans without male consent. Women find it particularly challenging to obtain a trade license due to complex bureaucratic procedures and gender bias. These barriers further restrict their access to formal financial services.
The Bangladesh Bank’s efforts to bridge the gender gap
The Bangladesh Bank (BB) has launched several initiatives to improve women’s access to formal finance. Key measures include:
The establishment of the Women Entrepreneurs Development Unit (WEDU) and dedicated desks in bank branches;
The introduction of a 1% cash incentive for timely loan repayment by women;
A mandate for banks to allocate 10% of their CMSME loan portfolio to women, which increased to 15% in 2024;
The provision of low-interest loans through a refinancing fund worth BDT 30 billion (USD 250.8 million) and the prioritization of women in other refinancing programs;
The reservation of 10% of the credit guarantee fund for women and the allowance of loans up to BDT 25,00,000 (USD 20,900) without collateral;
The simplification of loan applications and the development of financial literacy guidelines focused on women and;
The launch of entrepreneurship development programs with at least 30% female participation.
Despite Bangladesh Bank’s various initiatives to improve access to formal credit for women, their impact at the grassroots level remains minimal. For example, the regulator has relaxed the requirement for personal guarantors through multiple circulars. However, the lack of practical enforcement of these regulations and the absence of viable alternatives to personal guarantees has led banks to demand multiple personal guarantees. This has become a significant barrier for thin-file borrowers when they seek access to formal credit. However, bank staff and credit officers maintain that such practices are necessary to safeguard the bank’s interest and ensure the timely repayment of loans.
Designing financial products for women must begin with a gender-intentional approach
The banking sector’s failure to engage with the female segment and understand it limits its ability to serve it effectively. A clear, streamlined, standardized, and action-oriented framework to assess the potential for services and their impact can complement efforts to develop gender-sensitive approaches within banks.
The process of designing financial products for women entrepreneurs must be both intentional and nuanced. These may include targeted initiatives, such as gender sensitization for staff through gender-disaggregated data, to create evidence-based strategies and adopt design thinking in product and service development.
Insights from our work have helped commercial banks in Bangladesh gain a deeper understanding of the women’s MSME segment. This has led to product innovations. We discuss this in the second part of this series: Gender-intelligent banking (part 2): Small changes, big wins: How small changes by FSPs can result in big wins. Read the next part here to learn more.
Gender-intelligent banking (part 2): Small changes, big wins: How small changes by FSPs can result in big wins
Lameesa Akter, a successful cosmetics shop owner in Kotuali, Rangpur, applied for a BDT 5,00,000 (USD 4,180) loan at a bank. She had to spend two months running around the bank, which led to significant opportunity costs and a direct cost of BDT 5,000 (USD 42) in upfront expenses. However, she soon learned her loan application was invalid, and hence the loan was denied.
Lameesa’s story is not unique, as countless women in Bangladesh like her struggle to access financial products tailored to their specific needs and context. In the first part of this two-part blog series, we discussed the challenges practitioners face when they create gender-intentional products and services.
This blog highlights two insights from our work that our partner banks have used to address these challenges. These efforts have translated into small yet impactful product and channel design adjustments to improve women’s access to financial products. For more insights, see Insights to innovations: Designing financial services for women entrepreneurs.
Small ticket-size savings
Many banks in Bangladesh impose minimum deposit requirements, which range from BDT 10,000 (USD 84) to BDT 50,000 (USD 420). This is a significant barrier for women. Additionally, banks lack flexibility regarding savings product tenures and partial withdrawals.
Only 32% of women in our study saved at a bank. Many save informally at home or through other formal channels, such as microfinance institutions (MFIs), deposit pension scheme (DPS), and samitis, as these allow more flexible saving plans.
The table above presents the median amount saved by those who deposit a certain amount regularly through a savings instrument. It shows that this amount is the highest for savings in bank accounts, followed by DPS and MFI deposits. This implies that banks command the savers’ trust, but people save at banks only when they have substantial money to deposit in their accounts. Banks can introduce more flexibility in the amount that can customers can deposit and replicate a flexible model to attract savings from women entrepreneurs, which would help build their savings portfolio. Such a product would allow women who have just launched their businesses to gain banking experience and help banks onboard future credit-ready customers.
Mutual Trust Bank (MTB), one of our partner banks, built on these insights and designed a unique small savings product that specifically targets women entrepreneurs. Through a bundled, secured overdraft (SOD) facility in the accounts, MTB has enabled women to avail of low-cost, short-term, and readily accessible credit based on their savings accounts. The loan eligibility and amount would depend on their savings, which would also act as a nudge for these women entrepreneurs to save consistently.
Last-mile outreach through the digitization of delivery channels
The complex and extensive application paperwork involved in loan processing can be overwhelming and may deter many potential applicants. The lengthy turnaround time for loan processing further increases opportunity costs, which makes it difficult for women to dedicate the time needed to complete the process. Many diarists mention bank officials offer little support when they handle the diarists’ queries, which adversely affects their trust and confidence in the banks.
Women entrepreneurs also reported that multiple visits to the bank branch for loan applications adversely affect their business and personal lives and pose opportunity costs. Per our mapped credit journeys, they incur as much as BDT 6,000 (USD 50) in direct costs and at least five days of revenue loss as opportunity costs. For some, the long turnaround time banks take to process applications can be even more costly, as seen through the customer journey of Lameesa, the Women Business Diaries Project diarist whom we met at the start of this blog.
Alternate service delivery channels, such as mobile banking and digital application systems, can emerge as a practical solution. These can help reach women entrepreneurs in remote areas and ensure that applications are accepted only when required documents are submitted, which increases the likelihood of conversion of these leads. Our research also finds that most women are comfortable using digital interfaces in their daily lives, and 87% use their phones for mobile payments.
A digital loan application and tracking system will potentially solve these issues for female applicants and enhance their accessibility to bank loans. Insights from the project have facilitated Bank Asia, another partner bank, to create an online lead generation and loan application system, which uses digital channels for credit lead sourcing and application.
Making gender-intelligent financial services a habit
MTB and Bank Asia’s gender-intelligent product design exemplifies two critical pillars of gender-intentional banking: Data-driven decision-making and gender-focused business strategies. A gender-intelligent approach ensures that products and services are more accessible to women and have a greater potential for long-term adoption.
Through the pilot of its goal-based savings product, MTB seeks to onboard at least 500 new clients in the first year, with each client expected to save between BDT 25,000 (USD 210) and BDT 50,000 (USD 420) annually. This would result in a total savings portfolio of approximately BDT 2.5 million (USD 21,000) within the first year. Meanwhile, Bank Asia plans to extend credit to 1,000 additional clients through its pilot of a new digital lead generation and loan application system, with a minimum loan size of BDT 200,000 (USD 1,675). This would enable the disbursement of an additional BDT 200 million (USD 1.68 million) in its first year.
Financial institutions can create a lasting cultural shift if they embed gender intentionality across their governance, operations, and impact measurement. While MTB and Bank Asia have taken the initial steps, they are well-positioned to harness the significant business opportunities that emerge from serving female customers, such as Lameesa, and so many others like her.
Empowering women entrepreneurs: The Women Business Diaries project
Women entrepreneurs in Bangladesh are an essential force that drives economic growth and supports their communities. Even though they face numerous barriers, their resilience is inspiring. MSC launched the Women Business Diaries project with the Bill & Melinda Gates Foundation’s support to help women entrepreneurs take control of their finances and business growth.
Our latest video showcases the transformative power of the Diaries methodology through the lens of three remarkable women—Sriti Akhter, Sultana Begum, and Tahera Sharmin. After these entrepreneurs adopted the methodology in their business operations, they started to track daily income and expenses, understand cash flow, and plan for the future. These women are now equipped to navigate financial challenges, access credit, and reduce unnecessary expenses.
This site uses cookies, by continuing your navigation, you agree with our Cookie Policy.Ok
