Saturday, 12 July, 2025
The country's private sector credit growth plummeted to a decade-low of 7.15% in January, according to recent data from Bangladesh Bank. This marks the lowest growth rate since the central bank began recording private sector credit figures in January 2015. The data, released on Sunday, highlights a continued downward trend, signaling deepening challenges in the country’s financial sector.
Experts suggest that this decline reflects broader economic pressures, including inflation, rising interest rates, and global economic uncertainty, which have dampened demand for credit and investment in the private sector. The latest figures underscore growing concerns about economic stagnation and the need for structural reforms to support growth and recovery.
In December, the credit growth rate fell to 7.26 percent in the private sector, the main growth engine of the country's economy.
The last time private sector credit growth was this low was in May 2021, during the COVID-19 pandemic, when it fell to 7.55 percent.
The declining trend began after the protests in July, with the monthly credit growth in July: 10.13 percent, August: 9.86 percent, September: 9.20 percent, October: 8.30 percent and in November: 7.66 percent, the central bank data shows.
Bangladesh Bank's new monetary policy set a target of 9.8 percent credit growth for the private sector from January to July, the same as in the previous policy.
However, the latest data shows growth falling below even the central bank’s tightened money supply strategy to control inflation.
Meanwhile, Bangladesh Bank reports a 33.68 percent decline in the opening of letters of credit for capital machinery imports over the past six months, indicating reduced investment in new businesses.
Economists warn that lower credit flow to the private sector will slow industrial expansion, reduce investments, and affect employment opportunities.
A CEO of a private commercial bank explained this dire situation saying that banks are now more cautious in lending, particularly to factories facing operational challenges.
"Lending is crucial for private sector growth and expansion. The easier the access to loans, the larger the economy grows, boosting employment and GDP, he said and added that most banks are carefully reviewing such cases before approving loans.
Business leaders, however, argue that high interest rates discourage borrowing, making the cost of doing business a key issue.
"Many entrepreneurs say they cannot afford high interest rates, which is another reason for the slowdown in private sector credit growth," Mahbubur Rahman said.
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The country's private sector credit growth plummeted to a decade-low of 7.15% in January, according to recent data from Bangladesh Bank. This marks the lowest growth rate since the central bank began recording private sector credit figures in January 2015. The data, released on Sunday, highlights a continued downward trend, signaling deepening challenges in the country’s financial sector.
Experts suggest that this decline reflects broader economic pressures, including inflation, rising interest rates, and global economic uncertainty, which have dampened demand for credit and investment in the private sector. The latest figures underscore growing concerns about economic stagnation and the need for structural reforms to support growth and recovery.
In December, the credit growth rate fell to 7.26 percent in the private sector, the main growth engine of the country's economy.
The last time private sector credit growth was this low was in May 2021, during the COVID-19 pandemic, when it fell to 7.55 percent.
The declining trend began after the protests in July, with the monthly credit growth in July: 10.13 percent, August: 9.86 percent, September: 9.20 percent, October: 8.30 percent and in November: 7.66 percent, the central bank data shows.
Bangladesh Bank's new monetary policy set a target of 9.8 percent credit growth for the private sector from January to July, the same as in the previous policy.
However, the latest data shows growth falling below even the central bank’s tightened money supply strategy to control inflation.
Meanwhile, Bangladesh Bank reports a 33.68 percent decline in the opening of letters of credit for capital machinery imports over the past six months, indicating reduced investment in new businesses.
Economists warn that lower credit flow to the private sector will slow industrial expansion, reduce investments, and affect employment opportunities.
A CEO of a private commercial bank explained this dire situation saying that banks are now more cautious in lending, particularly to factories facing operational challenges.
"Lending is crucial for private sector growth and expansion. The easier the access to loans, the larger the economy grows, boosting employment and GDP, he said and added that most banks are carefully reviewing such cases before approving loans.
Business leaders, however, argue that high interest rates discourage borrowing, making the cost of doing business a key issue.
"Many entrepreneurs say they cannot afford high interest rates, which is another reason for the slowdown in private sector credit growth," Mahbubur Rahman said.
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