Bangladesh’s banking sector is facing a liquidity paradox, where banks are holding excess funds while businesses struggle to access credit, according to the Dhaka Chamber of Commerce & Industry.
Speaking at a policy discussion in Dhaka, DCCI President Taskeen Ahmed said that despite record liquidity in the banking system, private sector credit growth has slowed to just 6.03%, reflecting weak lending activity.
Data presented at the event showed total liquid assets exceeding Tk6.26 lakh crore, with excess liquidity above Tk3.21 lakh crore. However, rising non-performing loans (NPLs), now at 31.2%, along with capital shortfalls in several banks, have led to cautious lending practices.
Industrial and CMSME borrowers are facing increasing financial stress, with overdue loans rising significantly and loan recovery rates declining sharply. At the same time, high lending rates of 14–15%, driven by a 10% policy rate, are discouraging new investments and limiting access to working capital.
The situation has been further exacerbated by increased government borrowing from banks, which has crowded out private sector lending and widened the credit gap.
DCCI warned that the sector is caught in a cycle of rising defaults and tightening credit conditions, which is constraining business growth and weakening economic momentum.
To address these challenges, the chamber proposed a reform framework focused on reducing NPLs, strengthening bank capital, improving governance, and expanding access to finance—particularly for SMEs—through credit guarantees and alternative financing channels.
Industry leaders emphasised that restoring confidence in the banking system and improving coordination between lenders and borrowers will be critical to reviving private investment and sustaining economic growth.
