Tightened Monetary Policy undermines growth of trade and investment: DCCI

Dhaka Chamber of Commerce & Industry (DCCI) has expressed concern as Bangladesh Bank has continued its contractionary monetary policy, while private sector credit growth dropped to just 6.4 per cent in June 2025, the lowest in 22 years, signalling sluggish investment and industrial activities.

However, this downturn in credit growth to private sector is exacerbated by broader uncertainty in the business environment, unstable law and order situation, limited energy supply, fueled by tightened monetary policy by the Central Bank, the DCCI said in a statement on Thursday. 

On the other hand, the alarming rise in NPLs, which reached Tk 5.3 lakh crore and now exceeds 27.09 per cent of the total outstanding loans, presents a serious threat to financial stability and erodes investors’ confidence.

Despite this downward business confidence, the policy rate remains unchanged at 10 per cent, aiming to lower the inflation.

Though inflation has declined only marginally, this persistently high policy rate continues to impose a heavy borrowing burden, especially on CMSMEs and productive sectors, the chamber said. 

For the next six months, the private sector credit growth target has been set at 7.2 per cent, down from 9.8 per cent in the previous monetary policy, further highlighting the shrinking credit flow and making it increasingly difficult for businesses to sustain operation, the DCCI further said. 

The increased public sector credit growth target to 20.4 per cent which apparentlycreating fiscal burden on economy and mass taxpayers, reducing the private sector credit space and resulting into economic slowdown.

In light of these challenges, DCCI urged Bangladesh Bank to enhance credit flow to businesses through simplified terms and lower interest rates.

It also recommended a six-month extension in the loan classification timeline to support good borrowers in recovery without immediate default risk.

To ensure sustainable economic recovery, the Dhaka Chamber called for urgent structural reforms in the financial sector, greater transparency in credit allocation and strict monitoring to ensure enough liquidity.

A more flexible, inclusive, and sector-responsive monetary policy, aligned with fiscal discipline, is essential to restore confidence, spur investment, and uphold macroeconomic stability in the days to come, the DCCI added.