The private sector credit growth in Bangladesh increased to 7.57 per cent in March after hitting 21 years’ low in the previous month, according to available data.
The continuous fall of private sector credit growth ended in March, but it remains well below the central bank’s target, reflecting persistent weakness in investment and business confidence.
It was 6.82 per cent in February, 7.15 per cent in January 2025, 7.28 per cent in December, 7.66 per cent in November, 8.3 per cent in October, 9.2 per cent in September, 9.86 per cent in August, 10.13 per cent in July and 9.84 per cent in June 2024, according to the Bangladesh Bank data.
BB officials said that the growth improves due to Ramadan centric economic activities, which began on March 1.
Besides, some overdue foreign currency payments turned into forced loans, which also contributed to credit growth, they said.
The downward trend began in November 2022, but the situation worsened amid political uncertainty after the political changeover on August 5, 2024.
Bangladesh Bank’s new monetary policy, announced in Janua ry, maintained a private sector credit growth target of 9.8 per cent through July 2025.
However, the actual growth has remained far below the target, raising concerns about the economy’s momentum.
Economists warn that such sluggish credit growth could stall industrial expansion, deter new investments, and limit employment opportunities.
They attributed the slowdown to several issues, including a stagnant business climate, increased regulatory scrutiny by the central bank, political instability, weak law enforcement, and the exit or downsising of business by people previously linked to the ousted Awami League regime.
The Bangladesh Bank’s February 10 monetary policy statement acknowledged that the credit slowdown was not solely the result of policy rate hikes, but was compounded by slower deposit growth and higher government borrowing from commercial banks, which further squeezed out the private sector.
The central bank’s contractionary policy, including raising the policy rate to 10 per cent, has pushed commercial lending rates close to 15 per cent.
These high borrowing costs have made loans unaffordable for many businesses.
