The Digital Banking Framework and Inclusion Strategy

The 2027 roadmap transitions Bangladesh from “Agent Banking” to “Digital Banking”, focusing on a branchless, mobile-first approach to reach the last mile.

BB’s Digital Bank Establishment Guideline

Bangladesh bank has introduced a rigorous framework to ensure these new entities are both innovative and resilient.

• The Rationale: Digital banks are designed to eliminate the high overhead of physical branches, allowing for lower transaction costs & specialized services for the “unbanked” population.
• Capital & Governance: Paid-up capital in August 2024, BB raised the minimum capital requirement to BDT 3 Billion (up from BDT 1.25 Billion) to ensure only serious, stable players enter the market.
• Technology First: These banks must operate without physical branches, ATMs, or plastic cards, relying entirely on app-based interfaces and Bangla QR.
• Lending Focus: Unlike traditional banks,Digital banks are restricted from issuing Letters of Credit (LCs) or financing large industries, focusing on small-scale digital loans instead.

Source: Guidelines to Establish Digital Banks By The Central Bank.

Financial Inclusion: No-Frill Accounts & G2P

True inclusion is more than just technology, it’s about accessibility for the most vulnerable citizens.

• No-Frill Accounts (NFAs): These are “low-barrier” accounts that require a minimum deposit (as low as BDT 10 for farmers). Serving as the entry point for rural workers, street vendors, and students into the formal economy.
• Government-to-Person (G2P) Links: The roadmap aims to channel all social safety net payments and subsidies directly into these no-frill accounts. This “direct-to-wallet” model eliminates middlemen, reducing leakages and ensuring that government aid reaches the correct beneficiary instantly through the IIPS switch.
• Digital Credit Scoring: By analyzing the transaction data of these accounts, banks can provide credit to those who lack traditional collateral, effectively turning a “no-frill” user into a credit-worthy entrepreneur.

Source: The Financial Express (No-Frill Accounts’ drive growth).

Source: 40pc of social assistance to be disbursed

Regulatory Sandbox and Innovation Governance

To prevent regulation from stifling progress, Bangladesh Bank (BB) has shifted toward a “Test and Learn” philosophy. The 2027 roadmap establishes a structured environment where innovation is nurtured without risking national financial stability.

The Regulatory Sandbox: A Safe Harbor for Fintech

The Fintech Regulatory Sandbox, managed by the Payment Systems Department, serves as a controlled “live” environment.

• The Concept: It allows local fintech startups and financial institutions to test innovative products—such as blockchain-based remittances or peer-to-peer lending—on a limited scale with real customers.
• Benefits for Startups: Participants receive “no-objection” certificates to experiment with solutions that may not yet fit into existing legal frameworks, significantly reducing the time and cost to enter the market.
• Regulatory Clarity: Testing in the sandbox provides BB with the data needed to draft permanent, evidence-based regulations once a product is proven safe.

Source: AFI Global Report on DFS Supervision in Bangladesh.

AI Policy and the Future of Finance

Recognizing that Artificial Intelligence is no longer optional, the National AI Policy 2024 and BB’s sector-specific guidelines are setting the stage for an AI-driven financial landscape by 2027.

• Alternative Credit Scoring: AI models are being sanctioned to analyze non-traditional data (mobile bill payments, utility history) to provide credit scores for “thin-file” rural borrowers.
• Efficiency Gains: BB is encouraging the use of Robotic Process Automation (RPA) and AI chatbots to cut operational costs by an estimated 40-60%, making banking services cheaper for the end consumer.
• Governance & Ethics: The policy mandates “explainability” in AI decisions to prevent algorithmic bias, ensuring that automated loan rejections or fraud flags are transparent and fair.

Source: The Business Standard (Bangladesh Bank set to introduce AI policy)

Supporting Local Innovation

The roadmap aims to position Bangladesh as a regional fintech hub:

• Innovation Units: BB has established dedicated fintech offices to act as a one-stop virtual facilitation center for entrepreneurs.
• Fintech Hubs: Collaborations with the ICT Division’s “Smart Bangladesh” initiatives are creating incubators and accelerators, providing local startups with the mentorship and funding necessary to compete with global players.

Payment System Reforms and New Regulations

To anchor the 2027 roadmap, Bangladesh Bank (BB) has introduced a robust legislative spine: the Payment and Settlement Systems Act 2024.  This act provides the legal authority for two critical draft regulations aimed at securing the digital frontier: the E-Money Issuer (EMI) Regulation 2025 and the Payment System Operator (PSO) Regulation 2025.

E-Money Issuers (EMI)

Bangladesh is moving toward a globally recognized model that separates payment services from traditional banking. This allows non-bank fintech companies to issue digital value.

• Dedicated E-Money Issuers (DEMIs): Under the draft 2025 rules, non-bank entities can now apply to become “Dedicated EMIs.” These institutions must meet a minimum paid-up capital of BDT 500 million (50 Crore).
• Float Management & Safeguarding: To protect the public, EMIs are strictly prohibited from using customer funds for their own business. Every Taka issued as e-money must be backed 1:1 by physical cash held in a Trust and Settlement Account (TSA) at a scheduled commercial bank.
• Supervision: BB will perform real-time monitoring of these “floats” to ensure that even if an EMI faces financial trouble, the customers’ digital balances remain safe and redeemable.

Payment System Operators (PSO)

While EMIs hold the money PSOs (such as SSLCOMMERZ etc) are the “pipes” that move it. The Draft PSO Regulation 2025 tightens the oversight of these mediators.

• Licensing & Accountability: PSOs must now navigate a two-stage licensing process (NOC followed by a full license). Minimum paid up capital requirements ranges from 10 million BDT for digital merchant acquirers to BDT 200 million for ATM/CRM operators.
• Strict Penalty Framework: The draft introduces personal liability. If a PSO fails to maintain sufficient funds in its settlement account to pay merchants, directors and CEOs can be held personally liable and face fines of up to BDT 3 million (30 Lakh).
• Operational Standards: The regulation mandates a “Central Monitoring System” for all PSOs. For physical infrastructure like ATMs, downtime is strictly capped (e.g., maximum 12 hours in urban areas) to ensure the “Cashless Bangladesh” vision is reliable 24/7.

Strengthening Trust

Standardizing KYC (Know your Customer) for merchants and mandating all transaction data to be preserved for 12 years, these reforms aim to eliminate fraud and money laundering. This regulatory system ensures that as Bangladeshis move their wealth into the digital realm, their trust is backed by the full power of the central Bank.

Credit Infrastructure Reform: From Assets to Behavior

One of the quietest but most profound shifts in the 2027 roadmap is the overhaul of how credit worthiness is measured. Bangladesh bank is moving away from a system that favors large collateral toward one that rewards repayment behavior.

Credit Bureaus: From CIB to Private Credit Bureaus (2025)

BB will perform real-time monitoring of these “floats” to ensure that even if an EMI faces financial trouble, the customer digital balances remain safe and redeemable. For decades, the Credit information Bureau (CIB) acted as the sole, centralized database for loan data, primarily focusing on high-value bank loans. However, it often left “thin file” individuals – like farmers or small traders invisible to lenders.

In FY 2025 BB issued licenses to five private credit bureaus (including firms like Creditinfobd and TransUnion). The goal is to integrate alternative data, such as utility bill payments, mobile recharge patterns and MFS transaction history into their scoring models.

These reforms create “Reputation Collateral”. By 2027, a micro-entrepreneur can use a consistent history of paying electricity bills and making bKash transaction to secure a formal bank loan, even if they do not own land or buildings.

Expanded Credit for Devices

A digital financial roadmap is useless if citizens cannot afford the “gateways” which are “smartphones”. To solve this Bangladesh Bank is encouraging Device Financing schemes.

The 2027 Target is by facilitating device credit, the bank aims to push smartphone penetration beyond current levels, ensuring that by 2027, the technology gap does not become a financial gap.

Financial Inclusion Channels Supported by Bangladesh Bank

While digital transformation is the goal, the roadmap for 2027 acknowledges that high-tech solutions must be paired with high touch delivery channels to reach every citizen. Bangladesh Bank (BB) is scaling four primary pillars to ensure inclusive growth.

Agent Banking Expansion

Agent banking has become the backbone of rural inclusion, providing formal banking services where physical branches are not viable.

• BB will perform real-time monitoring of these “floats” to ensure that even if an EMI faces financial trouble, the customer’s digital balances remain safe and redeemable.
• By 2027 the focus will shift from simple deposits to “full-serice” agency points. These agents will facilitate SME loan disbursements and insurance premium collection
• All genet outlets will be equipped with Bangla QR capabilities, turning every rural agent into a digital payment hub for the community.

School Banking Initiatives

To foster a “savings culture” from a young age, BB has mandated aggressive school banking programs. The goal is to bring students into the formal system early ensures they are “digitally native” by the time they enter workforce.

National Financial Literacy Programs

Technology is only effective if people know how to use it safely. Bangladesh bank has launched the “Striving for Financially Literate Society” initiative.

Consumer Protection for Digital Users

Trust is the currency of a digital economy. The roadmap introduces several layers of protection:

• Chargeback Mechanisms: BB is working on automated systems that allow MFS and card users to reverse fraudulent or disputed transactions.
• Data Privacy: In alignment with the Personal Data Protection Ordinance 2025, the central bank is enforcing strict “data sovereignty” rules, ensuring that customer financial data is stored securely and used only with explicit consent.
• AI Surveillance: Real-time, AI-driven monitoring systems are being deployed to detect and block suspicious transaction patterns before they can drain a user’s account.

Green Finance and Sustainable Banking Mandates

As one of the world’s most climate-vulnerable nations, Bangladesh is leveraging its 2027 roadmap to integrate environmental resilience into the hearth of its financial system. BB is moving from simple “green quotas” to a sophisticated, risk-based sustainable banking model.

Bangladesh Bank’s Green Finance Mandates

The central bank has transitioned from voluntary guidelines to mandatory requirements to ensure capital flows toward eco-friendly projects.

• Aggressive Lending Targets: As of 2025, banks and financial companies are mandated to allocate 5% of their loan disbursement specifically to green finance and 20% to broader sustainable finance (including socially responsible projects)
• The 40% Vision: By 2027m the central bank aims for 40% of all private-sector loans to support sustainable ventures, covering 12 core categories such as renewable energy, liquid waste management, and “Green CMSMEs”
• Direct Green Refinance: To keep costs low for borrowers, BB operates a BDT 100 billion (10,000 Crore) refinance scheme, providing banks with low-cost liquidity for eco-friendly initiatives like solar power and ETPs (Effluent Treatment Plants).

Strengthened Regulation and Banking Sector Stability

To safeguard the 2027 digital vision, Bangladesh Bank is implementing a high-velocity stability agenda. This transition moves the regulator from being a reactive “Compliance Checker” to a proactive “risk manager”

Encouraging Digital Credit and Economic Growth

The final pillar of the 2027 roadmap aims to turn digital connectivity into economic momentum by enabling a “credit-on-demand” economy, encouraging BNPL financing for 4G/5G smartphones to build digital credit histories, expanding instant nano-loans and digitally focused CMSME financing through IIPS, and boosting startup growth via the Startup Finance Master Circular (July 2025), which offers a BDT 500 crore refinance fund, permits bank-led equity investments, and raises startup loan limits to BDT 2–8 crore by stage.

Consumer Trust, Protection, and Confidence

To address the trust deficit in a rapidly cashless economy, Bangladesh Bank is rolling out a Consumer Protection Framework (2025–2027) focused on safer and more transparent digital finance, strengthening data privacy under the Personal Data Protection Ordinance 2025, mandating consent-first data use, robust cybersecurity standards, and continuous audits of critical financial infrastructure, while also capping and standardizing digital fees, requiring clear Bangla disclosures for digital loans, ensuring fairness in AI-based credit scoring, and improving consumer confidence through centralized dispute resolution, a proposed digital financial ombudsman, and mandatory 24/7 customer support for digital banks.

Implementation Timeline: Bangladesh Bank’s 2025–2027 Roadmap

Bangladesh Bank’s roadmap to a “Smart Bangladesh” outlines a phased transition to a fully digital financial system by July 2027, beginning in 2025 with stronger laws, pilot digital banks, fintech regulation, and investor-friendly reforms, scaling in 2026 through private credit bureaus, nationwide payment interoperability, and global-standard alignment ahead of LDC graduation, and culminating in July 2027 with 75% cashless retail transactions, full rollout of the Inclusive Instant Payment System (IIPS), and complete adoption of IFRS-9–based credit risk management.