Nonbank Financial Institutions

Nonbank financial institutions (NBFIs) vary from country to country by types of providers, options for using the services, and presence in the market. In some countries, they may resemble traditional banks in all but name; in others, they may be niche institutions that provide financial services specific to key demographic groups, such as the agricultural sector. In most markets, microfinance institutions (MFIs) serve as one type of NBFI. In Bangladesh, especially, MFIs and NBFIs in general became very prominent after introducing the concept of microloans. However, in recent years, since 2016, banks and mobile money services have become more prominent – and reducing the prevalence of NBFIs. Similarly, in many other countries, NBFIs’ relevance is declining compared to the bank and mobile money markets.

Post office banks, cooperatives, and savings and credit cooperative organizations (SACCOs) are common forms of NBFIs operating in the FII program countries. NBFIs often serve similar numbers of women and men, making them an especially important component to inclusion. In many of the FII countries, women are as likely to have access to NBFIs as men, while being much less likely to have access to a bank. However, across many of the FII countries, more rural and below poverty individuals than their counterparts access NBFIs than mobile money or banks.

Use of Nonbank Financial Institutions

In Bangladesh and India, a greater proportion of women, compared to men, are registered NBFI users.

Registered Account Holders by Gender

7% of adults in Bangladesh are active users of an NBFI account.

The Nonbank Financial Institutions (NBFI) Indicator

Institutions Included in the Indicator by Country

True or false

NBFIs are regulated in Uganda.

True (they are regulated by the Bank of Uganda)

True or false

Bangladesh is often associated with the rise of microfinance.

True (Bangladeshi economist Muhammad Yunnus founded the Grameen Bank in the 1980s to provide credit to the rural poor)

Which FII country has the lowest percentage of adults actively using non-bank financial institution accounts?

A. Pakistan
B. Bangladesh
C. Nigeria
D. Kenya
A. Pakistan (1%)

True or false

In Asia, non-bank financial institutions are often more likely to serve rural or poor populations than banks are.

True (NBFIs continue to focus on serving disadvantaged populations)

Which type of non-bank financial institution is most common across all FII countries?

A. Microfinance institution
B. Post office bank
D. Cooperative
A. Microfinance institution

True or false

Financial inclusion in Pakistan is primarily through nonbank financial institutions (NBFIs).

False (it is primarily through banks, 78% financially included adults has a bank account)