From credit to capability: Microfinance in rural BD
Md Istiak:
In a quiet corner of Ramgati upazila in Lakshmipur, 32-year-old Aklima Begum sits beside her courtyard loom, a neat pile of white yarn at her feet. “Each tupi takes me about two hours,” she says, holding up a finely crocheted prayer cap. “I make about four or five a day. I never thought something made with my hands would travel abroad.”
Aklima’s craft is part of a transformation sweeping across rural Bangladesh, one that binds finance and faith, skill and survival—as microfinance institutions (MFIs) evolve from traditional loans into micro-enterprise facilitators. Handmade tupi production, once a small domestic craft, now quietly employs hundreds of thousands of women.
The evolution of microfinance
Bangladesh’s microfinance journey began after independence with small, collateral-free loans to poor women through village groups. For decades, these were viewed mainly as poverty-alleviation tools.
Over time, MFIs built deeper financial relationships with rural households.
According to the Microcredit Regulatory Authority (MRA), by June 2023, more than 731 licensed MFIs operated 25,000 branches, serving 40 million low-income members with outstanding loans of Tk 2,493 billion and savings deposits of Tk 621 billion.
“The first generation of microcredit was about survival,” explained Professor Saiful Islam of Dhaka University’s Department of Development Studies. “The next generation is about capability using finance to build enterprises, connect to value chains, and sustain livelihoods,” he told The New Nation on Thursday.
The rise of handmade tupi
In villages of Lakshmipur, Bogura and Kushtia, the rhythmic click of crochet hooks has become the soundtrack of rural enterprise. Handmade tupi production has grown into a multi-crore rural industry.
In Lakshmipur alone, women artisans export about five lakh caps monthly, worth roughly Tk 5 crore, according to local traders. In Bogura, nearly 300,000 women work in tupi embroidery and stitching, many under cooperative networks. Nationwide, close to a million women now earn partial or full livelihoods from the craft, with exports reaching Gulf countries, India and Pakistan.
“I started with a Tk 10,000 loan from ASA,” says Momena Khatun, an artisan in Bogura’s Shibganj area. “At first I used it to buy yarn and a sewing machine. Now five women work with me, and we send our caps to a wholesaler in Dhaka who ships them to Dubai.”
Small loans of Tk 8,000–20,000 have become seeds for micro-enterprises. For women like Momena, they mean not just income but independence and for MFIs, a new class of clients: productive, export-linked and ambitious.
Finance meets craft
The tupi economy has opened a path for MFIs to move beyond credit into enterprise facilitation. “We’re no longer just loan providers, we’re partners in livelihoods,” says Kamrul Hasan, regional manager at BRAC Microfinance in Rangpur.
MFIs now offer product-specific loans for better yarn, bulk purchases or workspace upgrades. Others provide micro-insurance to shield artisans from illness or supply shocks. Digital tools are reshaping commerce, as many cooperatives receive orders and payments through bKash or Nagad. “Earlier, we waited weeks for payments,” says Aklima. “Now I get money the same day the order is delivered.”
Challenges beneath the shine
Serving scattered small producers remains costly, monitoring and supporting thousands of artisans strains MFI capacity. Export fluctuations also pose risks. “When global orders drop or shipping costs rise, local artisans feel the shock immediately,” warns Mizanur Rahman, a senior officer at the Microcredit Regulatory Authority.
The digital gender divide persists: although 90 percent of MFI borrowers are women, fewer than 20 percent use digital finance directly.
Experts also caution against mission drift. As MFIs expand into enterprise loans, the poorest—especially in haor and char regions risk being left behind. “Enterprise finance is vital,” says Professor Selim Reza, “but the original mission of inclusion must not fade.”
The road ahead
As Bangladesh’s microfinance landscape evolves, the handmade tupi sector shows what inclusive growth can look like: finance as a catalyst for enterprise, export income and rural dignity.
“If we want microfinance to remain relevant,” argues Professor Imtiaz, “it must evolve with the economy. Supporting crafts like tupi means supporting women, entrepreneurship and inclusive growth all at once.”
Back in Lakshmipur, as the sun fades, Aklima folds her freshly finished caps into a cloth bag. Tomorrow she’ll take them to a trader who supplies exporters in Dhaka. “When I hold the money in my hand,” she says softly, “I feel like my work matters like I built something with my own hands.”
And in that feeling lies the promise of Bangladesh’s microfinance revolution—not just credit for survival, but the capability for a better life.