Brac Bank: Empowering the grassroots economy

Sketch: TBS

The cottage, micro, small and medium enterprises (CMSMEs) of Bangladesh are the backbone of our economy, contributing immensely to GDP and employment. Yet, these businesses often struggle to access formal financing due to the lack of collateral. Most financial institutions hesitate to lend to CMSMEs, fearing the risks associated with unsecured credit. At BRAC Bank, we see this challenge as our purpose. As the country's only SME-focused bank, we remain steadfast in our mission to ensure easy access to credit for grassroots entrepreneurs.

Today, BRAC Bank is proud to be the largest collateral-free CMSME financier in Bangladesh, with over 85% of our small business loans disbursed without any mortgage. Since our inception in 2001, we have supported around 20 lakh CMSMEs, disbursing over Tk200,000 crore in loans. But we're not just lenders—we strive to be the complete financial partner for CMSMEs.

We offer a wide range of services, including transactional banking, foreign trade financing, and cash management solutions, all tailored to meet the specific needs of CMSMEs. Beyond that, we actively connect CMSMEs with one another, creating opportunities for supply chain collaboration and market expansion. Through our women-focused banking proposition TARA, we provide comprehensive support to female entrepreneurs, not just financially but through capacity development and networking events as well.

To deepen our impact further, we're introducing the country's first SME Innovation Lab—a platform designed to nurture entrepreneurship through innovation and new ideas. Our specialised SME desks in branches are staffed by professionals trained to understand the unique challenges faced by small businesses, ensuring our clients receive personalised, hands-on support.

Reaching the unreachable

Our commitment to CMSMEs is reflected in our presence across Bangladesh. With 446 SME Unit Offices, 191 branches, 80 sub-branches, 1,123 Agent Banking Outlets and 330 ATMs, we ensure that banking services reach even the remotest corners of the country. Around 3,000 relationship officers are dedicated to CMSME banking, building long-term relationships with entrepreneurs and supporting them throughout their growth journeys.

Notably, 60% of our SME loans are disbursed in rural areas, making us the private bank with the highest rural penetration. Our 1,123 Agent Banking Outlets, strategically located in every district and most upazilas, bring basic financial services—like account opening, loan repayments, cash transactions, and utility payments—right to the doorstep of rural entrepreneurs. These agents, often locals, understand the language, culture, and business context of their communities, making financial inclusion truly effective and accessible.

Building a supportive ecosystem

Serving CMSMEs demands more than credit. It requires relationship banking, tailored solutions, and investments in ecosystem development. This is a model we have adopted wholeheartedly. But to make meaningful and scalable change, systemic reforms are essential.

We are in an ongoing dialogue with the Bangladesh Bank, advocating for reforms that would make banking more accessible and efficient for CMSMEs. One such initiative is our move towards a more digital and simplified onboarding process. By leveraging technology, we have introduced tools like our Digital Loan Origination Solution (eLAP), ASTHA App, and Corpnet, enabling seamless and secure B2B transactions and loan processing.

Still, several structural changes are necessary. In our view, the following reforms would significantly enhance CMSME banking and improve the ease of doing business:

• Simplifying legal documentation for CMSME loans, ideally linked to loan amounts.
• Enabling e-KYC for proprietorship-based CMSMEs to speed up the onboarding process.
• Expanding the Credit Guarantee Scheme to cover all CMSMEs and simplifying its enrolment.
• Online issuance of Trade Licences with five-year tenures and API-based integration for banking use.
• Open API access to Bangladesh Bank's CIB for real-time credit checks and establish a Credit Bureau for MFI clients.
• Legal recognition of digital signatures, replacing traditional wet signatures and reducing paperwork

The role of government

The Government of Bangladesh, along with Bangladesh Bank and SME Foundation, has taken commendable steps to uplift the CMSME sector. However, more cohesive and targeted reforms can unlock the sector's full potential.

We urge the government to establish a one-stop digital portal for all trade and business licences, streamlining the process of setting up and running a CMSME. Additionally, digitising account opening and credit processing, simplifying credit guarantee procedures, and allowing digital document storage can significantly reduce operational bottlenecks.

To further encourage banks, the government could consider tax incentives for income earned from CMSME financing and introduce separate tax slabs for small businesses. Promoting cashless transactions through tax rebates and legally recognising electronic fund transfer instructions as negotiable instruments would also incentivise formalisation.

At BRAC Bank, we believe CMSMEs are not just an economic segment—they are the lifeblood of Bangladesh's growth and resilience. Our journey of financing two million CMSMEs and reaching the most underserved regions is just the beginning. We envision a future where every entrepreneur, regardless of location or size, has access to the tools, training, and financial support needed to thrive.

As we move ahead, we call on all stakeholders—banks, regulators, development partners, and the government to work together in creating a robust, inclusive, and digitally enabled financial ecosystem for CMSMEs. The future of Bangladesh's economy depends on the strength of its smallest businesses. We remain committed to walking alongside them, every step of the way.