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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.​

 

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Another edible oil price hike may be the last straw

The prices of edible oils, which are among the major essential commodities, hardly need any cogent reason to rise in the kitchen market. Their prices have already been edging up ahead of Eid-ul-Fitr. The per litre prices of especially unbottled soybean and palm oils have seen a rise in the kitchen

thefinancialexpress.com.bd

Another edible oil price hike may be the last straw

FE
Published :
Apr 07, 2026 23:34
Updated :
Apr 07, 2026 23:34

The prices of edible oils, which are among the major essential commodities, hardly need any cogent reason to rise in the kitchen market. Their prices have already been edging up ahead of Eid-ul-Fitr. The per litre prices of especially unbottled soybean and palm oils have seen a rise in the kitchen markets of the city to the dismay of the general consumers already battered by high inflation and an overall rise in the cost of living. The traders, as usual, would like to attribute the increase in edible oil prices to the rising transport cost, increasing international commodity prices due to the war in the Middle East and the disruptions it caused in the supply chains, etc.

And, as if that was not enough, the oil refiners' body, the Bangladesh Vegetable Oil Refiners' and Vanaspati Manufacturers' Association (BVORVMA), meanwhile, is learnt to have made a fresh move for a significant hike in the per litre prices of edible oils by Tk 9 to Tk 13 to be made effective from tomorrow (April 9). And the proposal for the same has reportedly been submitted to the commerce ministry for its consideration. And before any official decision is made in this regard, the proposal for another upward adjustment in the edible oil prices would go through the usual process of scrutiny by the commerce ministry and the Bangladesh Trade and Tariff Commission (BTTC). Now it will be up to the government bodies concerned if they would bow to this fresh demand of the edible oil refiners' association and go for another raise in the edible oil prices. Notably, the last time official price adjustment to edible oils by the refiner companies made was in early December last year when the price of a litre of bottled soybean oil was increased by Tk.6, while that of palm oil by Tk.16. Unbottled soybean oil also saw a per litre price hike by Tk.7.

Now the refiners' proposal for another hike in the edible oil prices if effected, the price of a litre of bottled soybean oil will rise to Tk.207. In a similar fashion, the prices of loose soybean and palm oils will also go up to meet the demand of the refiners. Against this backdrop, if past experience is to go by, it is the general consumers who have invariably found themselves at the receiving end following the official deliberations. This time around, though the prices of edible oil remained rather stable during the last Ramadan, thanks perhaps to its adequate stockpile, the market behaviour changed after the Eid as the supply situation of this essential item appeared strained as reflected through its arbitrary price hike. So, what does that imply? Has the edible oil stock suddenly eroded in the meantime resulting in a tightening of its the supply and, that, too, unbeknown to the government? Were the government's monitoring activities not in place to assess the exact situation of the market? Small wonder that, the unscrupulous traders always take undue advantage of such monitoring lapse on the part of the government. In fact, the oil market operators, both in the retail and wholesale business, get away with their arbitrary hike in the edible oil prices. Going by the National Board of Revenue (NBR) data, palm oil, one of the most consumed cooking oils of the country, is procured from Indonesia and Malaysia. In that case, the argument of Middle Eastern war or its impact on supply chain does apply at least to price volatility of palm oil. So, the wholesalers' and the refiners' role, if any, in the arbitrary price hike of edible oils, as observed in the post-Eid kitchen markets, should come under proper government scrutiny. It is pertinent because a fresh plea for an official hike in prices of edible oils may prove to be the last straw for the common consumers.​

 

[Saif]

28.6pc growth of remittance inflow till April 6

Inflow of remittances witnessed a year-on-year growth of 28.6 percent reaching US$660 million in the first six days of April, according to the latest data of Bangladesh Bank (BB) issued today (Tuesday). Last year, during the same period, the country's remittance inflow was $514 million, BSS re

thefinancialexpress.com.bd

28.6pc growth of remittance inflow till April 6

Published :
Apr 07, 2026 18:49
Updated :
Apr 07, 2026 18:49

Inflow of remittances witnessed a year-on-year growth of 28.6 percent reaching US$660 million in the first six days of April, according to the latest data of Bangladesh Bank (BB) issued today (Tuesday).

Last year, during the same period, the country's remittance inflow was $514 million, BSS reports.

Throughout the July to April 6, 2026, of the current fiscal year, expatriates sent remittances of $26,869 million, which was $22,299 million for the same period of the previous fiscal year.​

 

[Saif]

Taka gains as dollar demand softens on US-Iran truce

The taka edged up against the US dollar yesterday, buoyed by a two-week ceasefire between the United States and Iran that eased pressure on the foreign exchange market.

www.thedailystar.net

Taka gains as dollar demand softens on US-Iran truce

Star Business Report

The taka edged up against the US dollar yesterday, buoyed by a two-week ceasefire between the United States and Iran that eased pressure on the foreign exchange market.

The weighted average exchange rate stood at Tk 122.75 per dollar, down from Tk 122.84 the previous day, according to Bangladesh Bank (BB) data.

A senior treasury official at a private commercial bank said the market turned volatile in recent weeks as importers rushed to buy dollars amid fears of a prolonged war. That anxiety appears to have subsided following the ceasefire.

When importers scramble for forward buying, rates tend to climb. As tensions cool, demand for forward trading of US dollars is expected to ease, he said.

Forward buying means agreeing today to purchase dollars at a fixed rate on a future date. Forward trading refers to buying or selling dollars now at a pre-agreed rate for delivery later, usually to hedge against exchange rate swings.

In its Bangladesh Bank Quarterly published yesterday, the central bank, however, cautioned that the economy remains exposed to external oil price shocks and currency depreciation.

“A sharp increase in global oil prices, particularly when combined with exchange rate depreciation, could exert significant upward pressure on inflation and lead to a decline in foreign exchange reserves,” it said.

The BB report said that allowing some exchange rate flexibility could help ease pressure on reserves. At the same time, balancing fiscal costs and inflationary pressures may require a partial adjustment to global oil prices.

“Rising geopolitical tensions -- particularly the Iran-Israel-USA conflict -- have already disrupted global energy and food supply chains and may exert additional pressure on both the external balance and domestic inflation. These developments pose near-term risks to price stability, export demand, and import costs,” said the report.

Mirza Elias Uddin Ahmed, managing director of Jamuna Bank, told The Daily Star that Bangladesh’s external position has not fundamentally weakened, although panic driven demand had unsettled the market.

The country’s gross foreign exchange reserves stand at about $34.35 billion, which the central bank described as a strong buffer for external trade payments. Usable reserves were $29.81 billion on April 2, enough to cover more than five months of imports.

The BB report said the central bank has maintained monetary tightening in response to stubbornly high inflation.

“However, inflation remains above the comfort threshold, disproportionately affecting low- and middle-income households,” it said, adding that the government and the central bank have taken several steps to rein in price pressures.

The BB has withdrawn LC margin requirements for imports of essential commodities, including rice, onions, dates, sugar, pulses and edible oil, it added.

Alongside truck sales by the Trading Corporation of Bangladesh (TCB), relevant agencies are working to curb hoarding, syndication and other illegal practices to ease supply bottlenecks.

On money and credit markets, the report said the near-term outlook depends on striking a balance between maintaining adequate liquidity, containing inflation and reviving private sector credit growth.

It said that public sector credit is likely to remain the main driver of overall credit expansion in the short term, potentially crowding out private investment and complicating efforts to sustain growth.

“A recovery in private-sector credit will depend on further moderation of lending rates, improved investor confidence, and greater political stability,” said the BB.​

 

[Saif]

The worrying contraction of manufacturing sector

Bangladesh's manufacturing sector appears to be undergoing a structural shift -- one that raises concerns about the country's long-term industrial trajectory. The recently released Economic Census report highlights a complex transformation in the economy, marked by rapid expansion in the number of

thefinancialexpress.com.bd

The worrying contraction of manufacturing sector

FE
Published :
Apr 10, 2026 00:24
Updated :
Apr 10, 2026 00:24

Bangladesh's manufacturing sector appears to be undergoing a structural shift -- one that raises concerns about the country's long-term industrial trajectory. The recently released Economic Census report highlights a complex transformation in the economy, marked by rapid expansion in the number of economic units but a noticeable decline in the relative importance of manufacturing. This divergence signals deeper structural challenges that warrant urgent attention. According to the report, the total number of economic units has surged to over 11.7 million, up significantly from 7.82 million in 2013. At first glance, this growth suggests a vibrant and expanding economy. However, a closer look reveals a less encouraging trend: the share of manufacturing has fallen from 11.1 per cent in 2013 to 9.57 per cent in 2024. This contraction indicates that while more businesses are being created, fewer are engaged in manufacturing -- traditionally a key driver of productivity, exports, and employment. Interestingly, despite the decline in its share of total economic units, manufacturing has managed to maintain -- and slightly increase -- its share of employment. This suggests that existing manufacturing enterprises may be absorbing more labour, even as the sector fails to attract a proportionate number of new firms. Nevertheless, manufacturing now ranks only as the fourth-largest category in terms of economic units, far behind wholesale and retail trade (40.19 per cent), transportation and storage (22.22 per cent), and other service activities (10.31 per cent).

The underlying reasons for this shift are not difficult to identify. The census paints a stark picture of the challenges faced by businesses, particularly in the manufacturing sector. A staggering 85.89 per cent of economic units report insufficient access to capital as their most significant constraint. Compounding the problem, 34.42 per cent of enterprises cite difficulties in obtaining loans from formal financial institutions, pointing to persistent inefficiencies in the credit delivery system. Beyond financing, businesses grapple with a host of operational challenges. Infrastructure deficiencies, rising production costs, dearth of skilled labour, and unreliable electricity and fuel supplies further undermine competitiveness. These barriers collectively discourage investment in manufacturing, which is typically more capital-intensive and risk-prone than service-oriented activities.

At the same time, the service sector continues to dominate the economic landscape, accounting for over 90 per cent of all economic units. The industrial sector, by contrast, comprises less than 10 per cent. The structure of the economy is also heavily skewed toward micro and cottage enterprises, which together make up more than 95 per cent of all units. The expansion of economic activity in both rural and urban areas is a positive development, with rural units outnumbering their urban counterparts. However, without a dynamic manufacturing base, this growth may not translate into sustained economic transformation.

While the dynamism of service sector is commendable, the contraction of manufacturing is undeniably troubling. Revitalising this sector requires targeted policy interventions -- particularly in improving access to credit, upgrading infrastructure, and developing skilled human capital. Without such measures, Bangladesh risks undermining the very foundation needed for long-term, inclusive, and export-led growth.​