Credit growth slowdown: a chance to regain momentum

Private sector credit growth in Bangladesh stood at 6.29% in September 2025, slightly below Bangladesh Bank's target of 7.2% for the fiscal year. While this signals some moderation in investment demand, it also offers an opportunity to consolidate stability and prepare for the next phase of sustainable growth.

Credit growth reflects business confidence and investment appetite. Periodic slowdowns are not unusual in an economy navigating structural changes. The present phase should therefore be seen as a transition—an opportunity to strengthen financial discipline and build a more resilient credit environment.

Businesses have taken a cautious approach to borrowing as interest rates adjust under the market-driven regime. This discipline, though temporarily slowing loan demand, promotes efficiency and prudent financial management. Over time, such behaviour supports a sounder and more sustainable growth model.

External challenges have also influenced investment sentiment. Exporters are contending with softer global demand, higher logistics costs, and evolving trade patterns. Yet, Bangladesh's diversified industrial base and growing domestic market continue to offer resilience. With inflation gradually easing and international markets stabilizing, the outlook remains positive.

Banks are also recalibrating their portfolios amid liquidity pressures and elevated non-performing loans (NPLs). Many have increased holdings in government securities to preserve balance sheet strength. While this temporarily reduces private lending, it reinforces financial stability—a necessary step toward restoring confidence.

Encouragingly, banks are expanding digital services and adopting improved credit assessment tools to reach new borrowers, particularly SMEs. As liquidity conditions improve, these innovations should translate into broader and more efficient credit access.

Bangladesh's private sector has consistently demonstrated resilience. To sustain employment and investment, access to finance must be maintained—particularly for key industries such as ready-made garments, leather and footwear, pharmaceuticals, light engineering, agro-processing, and technology.

The announcement of the national elections in February 2026 by the interim government provides an opportunity to strengthen investor confidence. A peaceful and transparent political process, coupled with prudent economic management, can renew optimism and stimulate private investment.

The recent moderation in credit growth should be viewed as a moment for policy fine-tuning rather than concern. By supporting productive sectors through targeted liquidity, stronger loan recovery frameworks, and diversified financing channels, Bangladesh can quickly regain its growth momentum.

The country's track record of adaptability and entrepreneurship remains its greatest strength. With continued confidence and coordinated action, the private sector will once again drive the next chapter of inclusive and sustainable growth.

The writer is the vice chairman of Newage Group of Industries.