Private-sector credit growth remained subdued at 4.75 per cent in August, staying below 5.0 per cent for the sixth consecutive month as weak investment demand, an energy crisis and rising bad loans continued to weigh on lending.
The prolonged slowdown has raised concerns over private investment and the pace of economic recovery despite a series of policy measures by Bangladesh Bank (BB) to stimulate lending.
The central bank has projected private-sector credit growth at 6.80 per cent by December. But the latest trend suggests the target will be difficult to achieve without a significant rebound in both credit demand and banks’ willingness to lend.
BB data show private credit growth stood at 4.72 per cent in March, 4.75 per cent in April, 4.98 per cent in May, 4.47 per cent in June, 4.62 per cent in July and a provisional 4.75 per cent in August.
That means growth has remained stuck within a narrow band of roughly 4.5 to 5.0 per cent for six months.
Bankers, economists and businesses blamed both weak demand for loans and tighter credit supply.
They said persistent energy shortages have disrupted industrial production and discouraged fresh investment. At the same time, the surge in non-performing loans has made banks increasingly cautious about taking new credit risks.
A BB official, speaking on condition of anonymity, said the central bank had already introduced concessions for distressed borrowers, including a facility allowing loans to be regularised with a two-year moratorium after a 2.0 per cent down payment.
The payment condition later was relaxed after many borrowers struggled to meet the requirement. Under the revised arrangement, half of the stipulated amount is payable upon approval and the rest within six months of the facility taking effect.
“Despite these facilities, private-sector credit growth has not gained momentum yet,” the official said.
BB has also eased loan rescheduling and restructuring rules and announced a Tk60 thousand crore stimulus package aimed at reviving businesses affected by the slowdown.
Yet neither banks nor businesses have regained enough confidence to significantly expand lending and investment.
The combination of weak demand, energy shortages, cautious banks and subdued public investment has left private credit growth near historic lows, complicating Bangladesh Bank’s effort to revive investment and push growth towards its year-end target.
