BUILD urges BB to focus on reviving private sector credit growth

Business Initiative Leading Development (BUILD) has urged Bangladesh Bank (BB) to focus on reviving private sector credit growth, reducing lending-deposit interest rate spreads and resolving non-performing loans (NPLs) in its first-ever Quarterly Monetary Policy Statement (QMPS) for October-December 2026.

In a statement, BUILD Chief Executive Officer Ferdaus Ara Begum on Thursday welcomed the quarterly monetary policy statement, saying greater transparency and predictability in monetary policy would help restore business confidence and facilitate investment planning.

The Monetary Policy Committee has reduced the policy repo rate to 9.50 per cent from 10 per cent to support economic recovery while continuing efforts to contain inflation.

However, BUILD expressed concern that actual borrowing costs remain between 13 per cent and 17 per cent, contributing to sluggish private sector credit growth, which stands at just 4.75 per cent.

Despite the Standing Lending Facility (SLF) rate being set at 11 per cent, effective lending rates for many small and medium enterprises (SMEs) and cottage, micro, small and medium enterprises (CMSMEs) remain considerably higher after accounting for risk premiums, processing charges and bank-specific spreads, the statement said.

BUILD urged the central bank to take effective measures to narrow the lending-deposit interest rate spread and ensure affordable credit for businesses.

Highlighting the challenges the banking sector is facing, BUILD said the NPL ratio had reached 32.78 per cent, eroding bank capital and weakening monetary policy transmission.

It called on Bangladesh Bank to announce a clear, time-bound strategy for resolving non-performing loans, backed by stronger governance and effective recovery mechanisms, to restore the health of the banking sector.

BUILD also expressed concern that the easing of headline inflation to 8.26 percent in August could be undermined by the fuel price hike in late September.

Higher fuel prices could increase transport, production and consumer costs, reversing recent progress in containing inflation, it said, adding that volatility arising from the conflict in the Middle East and disruptions in the Strait of Hormuz had created additional external risks.

The organisation said employment generation should be a priority of monetary policy amid sluggish industrial growth. Industrial growth deteriorated sharply from 6.82 percent in the first quarter to minus 0.28 per cent in the third quarter, according to the statement.

Elevated borrowing costs, external volatility and higher fuel prices are creating additional pressures on businesses, BUILD said, stressing the need to balance inflation containment with economic recovery, investment and employment generation.

The statement further called for a clear monetary policy transmission framework that goes beyond monitoring the policy rate and establishes links between monetary policy and private sector investment, industrial production, SME credit and employment.�"BSS