Every emerging economy eventually reaches a stage where structural reform becomes unavoidable, and Bangladesh appears to be approaching that point.
The country now faces a defining challenge: stabilising macroeconomic pressures while creating employment for a rapidly expanding young population, two priorities that sit at the centre of the new government’s economic agenda.
The government’s electoral manifesto, framed around the vision “We will work, we will build the nation,” outlines an ambitious roadmap to create 10 million jobs, harness the country’s demographic dividend and transform Bangladesh into a $1 trillion economy by 2034.
Achieving these goals will require coordinated efforts across multiple sectors, but the banking system will play a decisive role as commercial banks move beyond their traditional function as lenders and become active partners in entrepreneurship and job creation.
Economists often describe Bangladesh’s current macroeconomic position as a “low-level equilibrium,” where the economy remains stable but operates below its potential in investment, productivity and employment.
Escaping this trap will require stronger investment-led growth while maintaining macroeconomic stability.
Policy priorities outlined by Bangladesh Bank Governor emphasise inclusive employment, revival of closed industries and rule-based financial governance, highlighting the need to align financial institutions more closely with national development objectives.
Turning these priorities into tangible outcomes will depend largely on how commercial banks adapt their strategies.
One major weakness of Bangladesh’s banking system remains its heavy reliance on collateral-based lending.
Many entrepreneurs in information technology, fintech, agritech, light engineering and cottage, micro, small and medium enterprises possess innovative ideas but lack property to pledge as security.
Banks therefore need lending models that assess business potential, entrepreneurial capability and projected cash flows rather than focusing solely on collateral.
Digitalisation is already creating new opportunities.
Transaction data from mobile financial services, digital payments and utility bills can support alternative credit scoring systems.
Some banks have introduced digital or nano-loan programmes, but these initiatives remain limited.
Expanding them, alongside digitised loan processing and reasonable interest terms, could significantly accelerate enterprise formation and employment.
Startup financing is another critical area.
Bangladesh’s expanding digital economy is producing innovative firms that often struggle to obtain conventional bank loans.
Developing equity-based financing mechanisms, including venture capital arms or startup funds within commercial banks, could support early-stage enterprises through seed financing and innovation grants.
Women’s economic participation also remains underutilised.
Many women entrepreneurs face barriers to bank finance because they lack collateral assets.
Banks can address this through personal guarantee and group guarantee lending models alongside specialised credit programmes for women.
Supporting the government’s “One Village, One Product” initiative could further strengthen rural economies by promoting locally distinctive goods and connecting them to global markets through export financing and digital payment systems.
Banks should also play a broader role in supporting entrepreneurship.
Many potential entrepreneurs struggle with procedures such as trade licensing, accounting systems and tax compliance.
Establishing entrepreneurship advisory centres within bank branches, including agent banking outlets in rural areas, could provide mentorship and practical guidance.
The banking sector must also adapt to the rise of the gig economy.
Bangladesh has become an important participant in global freelance markets, yet freelancers often lack the salary documentation required for financial services.
Banks could introduce income-averaged credit cards, flexible savings schemes and specialised loans tailored to freelance income patterns.
Reducing regional economic disparities will also require targeted financing.
The government’s development agenda highlights region-specific industrial growth, including agro-processing and export industries in northern Bangladesh.
Banks can support such initiatives through cluster-based lending and syndicated financing.
Bangladesh’s maritime resources also offer significant potential in the blue economy, including marine fisheries, ship recycling and eco-tourism.
Structured financing for entrepreneurs in coastal regions could unlock new sources of growth.
Commercial banks can also deploy their corporate social responsibility funds more strategically.
Instead of focusing mainly on charity, such programmes could support technical training, digital skills and language education for young people through partnerships with universities and innovation initiatives.
None of these efforts will succeed without strong governance in the financial sector.
Transparent lending practices, strict oversight and the removal of undue political or corporate influence remain essential.
Addressing the long-standing problem of wilful loan defaults is equally important to restore confidence and free liquidity for productive investment.
As Bangladesh seeks to enter a new stage of development, its banking sector must assume a more dynamic role.
By expanding access to finance and supporting entrepreneurship, commercial banks can help translate the government’s economic vision into real opportunities.
If banks place greater trust in the creativity and determination of Bangladesh’s young population, they can help unleash a new wave of enterprise and employment on the country’s path towards a $1 trillion economy by 2034.
The author is a banker and financial sector analyst. Email: [email protected]
