Tight monetary policy hampering trade, investment: DCCI

The Dhaka Chamber of Commerce and Industry (DCCI) has raised serious concerns over Bangladesh Bank's continued contractionary monetary policy, warning that high interest rates and declining credit growth are choking trade, investment and industrial activity.

In a statement today (31 July), DCCI said private sector credit growth dropped to 6.4% in June 2025, the lowest in 22 years, reflecting a sharp economic slowdown.

It blamed the downturn on tightened monetary conditions, energy shortages, persistent business uncertainty and law and order concerns.

DCCI also flagged a spike in non-performing loans (NPLs), now at Tk 5.3 lakh crore or 27.09% of total loans, calling it a major risk to financial stability and investor confidence.

Despite weak business sentiment, the central bank has held its policy rate at 10% to control inflation.

However, DCCI observed that inflation has eased only slightly while high borrowing costs continue to hurt cottage, micro, small and medium enterprises (CMSMEs) and other key sectors.

The new monetary policy reduces the private sector credit growth target to 7.2% for the next six months, down from 9.8%, further fuelling fears of a credit squeeze. In contrast, public sector credit growth has been raised to 20.4%, which DCCI warns could increase fiscal pressure and crowd out private investment.

To address the crisis, DCCI urged the central bank to lower interest rates, extend loan classification periods by six months for good borrowers, ensure transparent credit allocation, enact financial reforms and maintain adequate liquidity alongside stricter monitoring.

The chamber called for a more flexible monetary approach aligned with fiscal discipline to revive investor confidence, stimulate economic activity and safeguard long-term macroeconomic stability.