Bangladesh’s business community is ramping up pressure on the central bank, urging a policy recalibration to address tightening credit conditions and rising costs, which they argue are stifling investment and production.
Private sector credit growth has slowed to 6.03 per cent, marking the lowest rate in over two decades. Meanwhile, lending rates have soared to 16-17 per cent, compounded by a 10 per cent policy rate, driving borrowing costs across the economy to unsustainable levels.
On Monday, leaders from the Dhaka Chamber of Commerce and Industry (DCCI) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) met with Bangladesh Bank (BB) Governor Md Mostaqur Rahman to present a unified set of demands covering credit rules, interest rates, exchange rate management, and export financing.
The heart of their concerns lies in the growing mismatch between policy tightening and weakening demand. Business leaders argue that the shift in loan classification from nine months to three months has exacerbated financial strain on companies already battling high operating costs, energy shortages, and sluggish demand.
DCCI President Taskeen Ahmed said rescheduling options for unintentional defaulters should be revisited, and the loan classification period should be extended to at least six months. He cautioned that stricter rules risk pushing otherwise viable businesses into default.
Simultaneously, the cost of capital has emerged as a major constraint. With high policy rates maintained to curb inflation, lending rates have risen sharply, making bank financing increasingly unaffordable and, in many cases, ineffective.
Business leaders highlighted the lending-deposit spread exceeding five percentage points, arguing it is eroding investor confidence, particularly among domestic entrepreneurs. They called for a gradual reduction in policy rates alongside targeted, subsidised credit for priority sectors such as exports, SMEs, and productive industries.
The exchange rate has also become a key focus. The FBCCI urged the central bank to halt further depreciation of the taka, asserting that increased remittance inflows and current dollar availability should stabilise the currency.
FBCCI Secretary General Md Alamgir stated that there is no shortage of dollars, and further devaluation would only increase cost pressures. Participants in the meeting said the governor suggested no immediate need for adjustment but warned against any artificial rise in the exchange rate.
This delicate policy balance remains crucial. While Bangladesh Bank has signalled no immediate move to weaken the taka, any future pressures could raise import costs and fuel inflation, particularly at a time when businesses are already contending with rising energy and raw material prices.
In light of this, exporters have renewed their calls for stronger financing support. The FBCCI proposed increasing the Export Development Fund (EDF) to $5 billion from $2.3 billion, extending loan tenures to five years, and reducing interest rates to 2 per cent.
Previously, the EDF had reached $7 billion before being reduced due to concerns over misuse and reforms linked to the International Monetary Fund (IMF). Business leaders argue that restoring access to low-cost foreign currency financing is essential for maintaining competitiveness amid rising input costs and weakening global demand.
The discussions also brought underlying structural concerns back into focus. Business leaders raised issues regarding the ongoing consolidation of five Shariah-based banks into a single Islamic entity, stressing the need to protect depositors and borrowers while restoring discipline in a sector burdened by high non-performing loans.
They also called for a review of single borrower exposure limits, highlighting how rising production costs are increasing the financing needs of large industrial operations.
Together, these demands signal a shift in business sentiment—from cautious adjustment to active concern about the constraints imposed by current policy.
