Digital Finance Surges in Rural Areas, Insurance Lags Behind

Bangla Press Desk:  Nearly 87 per cent of rural residents in Bangladesh now have access to mobile financial services (MFS), but only 17 per cent have access to insurance, highlighting a major gap in financial protection.

The findings were revealed in the Comprehensive Rural Finance Study, a three-year research project conducted by the Institute for Inclusive Finance and Development (InM) with support from Bangladesh Bank.

The report was launched in Dhaka on Saturday.

The study, based on nearly 7,000 household interviews, produced 22 analytical reports and policy briefs.

The study found that MFS has become a major driver of rural financial inclusion. However, insurance coverage remains particularly weak. While 58 per cent of rural households have access to formal savings and 54 per cent to formal credit, only 17 per cent reported access to insurance.

Microfinance Institutions (MFIs) continue to dominate rural financial inclusion. They account for 44.61 per cent of formal savings access nationally, compared with 22.93 per cent for banks and non-bank financial institutions.

MFIs also dominate grassroots lending through door-to-door operations and collateral-free financing, while commercial banks remain under-penetrated because of structural barriers facing rural and low-income borrowers.

Despite the expansion of formal financial services, informal lenders still serve nearly 30 per cent of households.

Rangpur recorded the highest level of exclusion, with 45.94 per cent of households having no access to savings facilities.

Poverty was identified as the biggest obstacle to formal savings, with 77 per cent of respondents saying they had no money left to save.

Speaking at the launch, Finance Division Secretary Dr Md Khairuzzaman Mozumder said access to finance remained a major hurdle and called for simpler banking procedures so that people unable to reach banks could benefit from grants and credit schemes.