Background How the informal providers deliver health services are not well understood in Bangladesh. However, their practices are often considered inappropriate and unsafe. This study attempted to fill-in this knowledge gap by exploring their perceptions about diagnosis and appropriate treatment, as well as identifying existing barriers to provide appropriate treatment. Methods This exploratory study was conducted in two peri-urban areas of metropolitan Dhaka. Study participants were selected purposively, and an interview guideline was used to collect in-depth data from thirteen providers. Content analysis was applied through data immersion and themes identification, including coding and sub-coding, as well as data display matrix creation to draw conclusion. Results The providers relied mainly on the history and presenting symptoms for diagnosis. Information and guidelines provided by the pharmaceutical representatives were important aids in their diagnosis and treatment decision making. Lack of training, diagnostic tools and medicine, along with consumer demands for certain medicine i.e. antibiotics, were cited as barriers to deliver appropriate care. Effective and supportive supervision, training, patient education, and availability of diagnostics and guidelines in Bangla were considered necessary in overcoming these barriers. Conclusion Informal providers lack the knowledge and skills for delivering appropriate treatment and care. As they provide health services for substantial proportion of the population, it’s crucial that policy makers become cognizant of the fact and take measures to remedy them. This is even more urgent if government’s goal to reach universal health coverage by 2030 is to be achieved. Electronic supplementary material The online version of this article (10.1186/s12913-019-4254-3) contains supplementary material, which is available to authorized users.