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Private credit growth stuck despite political transition

FE REPORT
Published :
Apr 06, 2026 12:56
Updated :
Apr 06, 2026 12:56

Private-sector credit growth remains subdued despite a peaceful transition of political power, reflecting persistent economic headwinds and weak business confidence.

Entrepreneurs continue to hold back on expansion plans amid high borrowing costs, energy shortages and lingering uncertainties.

The sluggish credit flow, as low as 6.03 per cent in February 2026, underscores the challenges facing the economy, as both lenders and borrowers adopt a cautious stance in an environment marked by financial stress and structural constraints.

The rate stood at 6.03 per cent in the previous month of January as well, according to the latest data from Bangladesh Bank (BB).

Officials and entrepreneurs identified factors such as higher lending rates, security concerns in industrial belts and pre-election uncertainties as key reasons behind the reluctance of businesses to expand.

Seeking anonymity, a BB official said private sector players appear reluctant to borrow from commercial lenders, particularly since the July-August mass uprising in 2024, due to multiple challenges including the energy crisis, deterioration in law and order in manufacturing hubs, high lending rates and post-uprising political uncertainties.

On the other hand, he noted, commercial banks have become increasingly cautious in approving fresh loans to the private sector amid a persistently high level of non-performing loans (NPLs).

In fact, private sector credit growth has been on a downward trend for several months.

Director General of the Bangladesh Institute of Bank Management (BIBM), Dr Md Ezazul Islam, said the country witnessed a peaceful general election in February, which he believes could help restore investor confidence.

"We hope private sector credit growth will start gaining momentum from the last quarter of this fiscal year," the economist added.

Anwar-ul Alam Chowdhury, President of the Bangladesh Chamber of Industries (BCI), said industrial units have struggled to maintain production in recent months due to the energy crisis and security concerns.

"Increased lending rates have dealt the final blow. Under such circumstances, who will expand their business? Even running existing operations has become extremely difficult for entrepreneurs," he said.​

 

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Export development fund may rise to $5b

Bangladesh Bank Governor Md Mostaqur Rahman yesterday assured business leaders that the export development fund (EDF) may be gradually expanded to $5 billion, according to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

www.thedailystar.net

Export development fund may rise to $5b

Business leaders say central bank governor gave the assurance

Star Business Report

Photo Courtesy: Bangladesh Bank

Bangladesh Bank Governor Md Mostaqur Rahman yesterday assured business leaders that the export development fund (EDF) may be gradually expanded to $5 billion, according to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

The assurance came during a meeting held at the central bank in Dhaka with FBCCI leaders, said Md Alamgir, secretary general of the apex business body, after the meeting.

Alamgir told journalists that the EDF, formed from foreign exchange reserves to support exporters, once stood at $7 billion but has now declined to around $2.2 billion.

Business leaders urged the central bank to raise the fund to $5 billion, and the governor responded positively, assuring that the amount would be increased in phases, he added.

On lending rates, Alamgir said business leaders stressed the need to keep interest rates stable to encourage investment and maintain industrial competitiveness.

They also recommended gradually bringing lending rates down to single digits.

The business leaders further urged the central bank to increase credit flow to the private sector, saying financing should be directed more towards productive sectors by reducing pressure from public-sector borrowing.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, said the proposal to expand the EDF had received the governor’s agreement.

“The fund was reduced because of IMF-related conditions. We have proposed raising it from around $2.5 billion to $5 billion first, and later to $8 billion,” Hatem said.

He added that business leaders also sought relaxation in loan classification rules.

At present, borrowers are classified as defaulters if they fail to repay loans for three months.

Business leaders proposed extending that period to six months. They also urged the central bank to stop the practice under which one defaulting business affects the classification status of its affiliated entities.

In addition, business leaders proposed extending the repayment period after loan rescheduling from the current four to five years to 10 years.

FBCCI also recommended introducing low-cost green financing facilities to encourage investment in renewable energy, including solar power, to reduce energy costs.​

 

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Per capita income $2,769 in FY25: finance minister

Finance minister Amir Khasru Mahmud Chowdhury on Monday told the Jatiya Sangsad that Bangladesh’s per capita income for the 2024–25 financial year stood at $2,769.

www.newagebd.net

Per capita income $2,769 in FY25: finance minister
Staff Correspondent 06 April, 2026, 18:24

Finance minister Amir Khasru Mahmud Chowdhury on Monday told the Jatiya Sangsad that Bangladesh’s per capita income for the 2024–25 financial year stood at $2,769.Diaspora community news

He made the announcement in response to a written question from Dhaka-18 lawmaker SM Jahangir Hossain during the ninth day of the first session the 13th JS, presided over by deputy speaker Kayser Kamal.

The per capita income was $2,738 in FY 2023–24.

According to the minister, the figure of per capita income was based on the latest official data published by the Bangladesh Bureau of Statistics.

Amir Khasru, who is also the planning minister, emphasised that one of the government’s key objectives was to achieve a trillion-dollar economy by 2034.

To reach this milestone, the government has prepared a plan encompassing investment, employment, economic democratisation, creative economy, sports economy and other strategic areas.

Amir Khasru highlighted that raising per capita income required a multi-sectoral approach rather than focusing on a single area.

The minister said that the government was working to increase employment, promote investment, boost production, expand exports, enhance remittances, develop skills, strengthen social protection and maintain macroeconomic stability.

He said that key initiatives included creating new employment opportunities across the manufacturing, construction, services, IT, agriculture, agro-processing, and small entrepreneurship sectors.

He said that expanding job opportunities would raise household incomes, gradually increasing per capita income.

Amir Khasru said that the government was also facilitating private investment and industrialisation by simplifying business start-up and expansion processes, creating investment-friendly environments, and promoting productive sectors, and that higher private investment would lead to new factories, businesses and jobs, directly boosting income levels.

He said that support for small and medium enterprises and new entrepreneurs remained a priority, including measures to provide easier access to financing, encourage women and youth entrepreneurs and improve market entry opportunities, which were expected to expand local economic activity, create jobs and increase household incomes.

The finance minister explained that export growth was being promoted through incentives for export-oriented industries, diversification of products, exploration of new markets, and maintenance of existing markets, and that increased export earnings would raise production, industrial employment and the overall income.

The minister highlighted that the government was focusing on strengthening remittances, skills development and technical training to boost incomes and productivity.

He said that efforts to enhance agriculture, rural infrastructure and small businesses, particularly in the rural areas, would raise the national income.

The minister said that some measures were already under way in the FY 2025–26, while others would be implemented gradually, with an emphasis on employment, investment, exports and remittances.​