The 83-year-old passed away on Friday in a Dhaka hospital while undergoing treatment for a brain tumour.
His body was brought to a stadium in Dhaka where at least 10,000 people attended the funeral, an AFP photographer from the venue said.
Nobel laureate Muhammad Yunus, top politicians, diplomats and businessmen paid tribute to Abed, who founded BRAC in 1972.
"Sir Abed's NGO helped me to start my business. It was him who pulled me up when I thought I am done," Abdur Rahman, a small business entrepreneur, said as he came to say a final goodbye.
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BRAC's micro-finance approach has been hailed as one factor behind the drop in the proportion of Bangladeshis living in extreme poverty from 80 percent to around 40 per cent.
The approach proved so successful that BRAC, which has more than 100,000 local employees worldwide — expanded elsewhere in Asia and even to Africa and has been lauded by world figures such as former US president Bill Clinton.
The NGO has helped nearly 150 million people out of poverty according to the World Food Prize, which honoured Abed as its Laureate in 2015.
Abed also received a knighthood from Britain in 2010 for his work.
The accountant-turned-aid worker will be laid to rest in a Dhaka graveyard, BRAC spokesperson Asif Saleh told reporters.
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