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Private sector credit growth in January fell to 7.15 per cent, marking the lowest in a decade, according to Bangladesh Bank data.
The central bank has private sector credit growth figures available on its website since January 2015, and the latest data reveals that such a low growth rate has not been suffered in the past 10 years.
The central bank published the latest figures on Sunday, showing a continued downward trend.
In December, the growth rate stood at 7.26 per cent.
The last time private sector credit growth was this low was in May 2021, during the COVID-19 pandemic, when it fell to 7.55 per cent.
The declining trend began after the protests in July, with the monthly credit growth as follows:
July: 10.13 per cent
August: 9.86 per cent
September: 9.20 per cent
October: 8.30 per cent
November: 7.66 per cent
Bangladesh Bank's new monetary policy set a target of 9.8 per cent credit growth for the private sector from January to July, the same as in the previous policy.
However, the latest data shows growth falling below even the central bank’s tightened money supply strategy to control inflation.
Meanwhile, Bangladesh Bank reports a 33.68 per cent decline in the opening of letters of credit for capital machinery imports over the past six months, indicating reduced investment in new businesses.
Economists warn that lower credit flow to the private sector will slow industrial expansion, reduce investments, and affect employment opportunities.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, told bdnews24.com: "Lending is crucial for private sector growth and expansion. The easier the access to loans, the larger the economy grows, boosting employment and GDP."
He added that banks are now more cautious in lending, particularly to factories facing operational challenges.
"Banks are carefully reviewing such cases before approving loans," he said.
Business leaders argue that high interest rates discourage borrowing, making the cost of doing business a key issue.
"Many entrepreneurs say they cannot afford high interest rates, which is another reason for the slowdown in private sector credit growth," Mahbubur Rahman said.