News

Sept private sector credit growth dips further
03 Nov 2026
Source: The Financial Express

Private-sector credit growth fell to a historic low of 4.17 per cent in September 2026 amid a prolonged slowdown in economic activity.
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Private-sector credit growth has remained below 5.0 per cent for seven consecutive months, as demand for loans has weakened mainly due to inadequate energy supplies and geopolitical tensions, according to bankers.

They also said most banks had become cautious about approving fresh loans to avoid repayment risks amid a rise in non-performing loans (NPLs) across the banking sector.

The private sector credit growth came down to 4.17 per cent in September 2026 on a year-on-year basis from 4.75 per cent a month ago, according to the central bank's provisional data.

It was 2.63-percentage points lower than the Bangladesh Bank (BB) target of 6.80 per cent for the first half (H1) of current fiscal year (FY) 2026-27.

Actually, the private sector 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 4.75 per cent in August, the BB data showed.

A banker with 36 years of experience, who served as a senior executive at a leading private commercial bank, told The Financial Express (FE) that he had never witnessed such low private-sector credit growth.Financial News Subscription

He also said the slowdown had persisted despite the ongoing implementation of a Tk 600-billion stimulus package.

The central bank had announced the stimulus package aimed at reviving economic activities and supporting businesses affected by the prolonged slowdown.

Besides, the banking regulator has already taken several measures to encourage banks to resume lending, including facilities for loan rescheduling and restructuring.

Despite these measures, banks and private-sector entrepreneurs have yet to regain sufficient confidence to significantly expand lending and investment, the senior banker explained.

"We cannot expand our loan portfolios to the expected level, mainly due to a shortage of creditworthy borrowers and an unfavourable investment climate," the private banker noted.

Talking to The FE, a senior central banker described the situation in Bangladesh as a 'credit crunch', mainly driven by the high volume of NPLs.

The classified loans in the country's banking sector ballooned to Tk 6.06 trillion as of June 2026, accounting for 32.78 per cent of the entire loans worth Tk 18.50 trillion disbursed by all scheduled banks.

The central banker also said fresh credit growth was negative at most banks, indicating their inability to expand lending.

"A coordinated approach is needed to accelerate private-sector credit growth," he noted.

"Private sector credit growth has fallen below 5.0 per cent, the lowest in more than three decades," Md Touhidul Alam Khan, Managing Director & Chief Executive Officer (CEO) of NRBC Bank PLC told The FE while replying to a query.

Dr. Khan also said this is the outcome of several interlinked factors: persistent gas and power shortages that prevent industries from operating at full capacity, weak domestic and export demand that has curbed appetite for fresh investment, low capacity utilisation in large manufacturing that has reduced borrowing needs, and a cautious banking sector weighed down by high lending rates and a large volume of NPLs.

 
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