Tightened Monetary Policy hampers trade and investment growth: DCCI

The Dhaka Chamber of Commerce and Industry (DCCI) today voiced concern over the Bangladesh Bank’s continued contractionary monetary policy, warning that it is dampening private investment and hindering industrial activity.

The central bank has kept the policy rate unchanged at 10 percent for the July–December period in an effort to curb inflation, as outlined in its latest monetary policy statement.

The DCCI’s reaction comes amid a sharp slowdown in private sector credit growth, which fell to just 6.4 percent in June 2025—the lowest level in 22 years. The chamber said the stagnation reflects eroding business confidence and called on the central bank to adopt a more accommodative policy stance to stimulate economic momentum.

It also noted that the downturn in private credit is being intensified by growing uncertainty in the business climate, weak law and order, and a constrained energy supply—all of which are being worsened by the tight monetary policy.

The chamber further flagged a steep rise in non-performing loans (NPLs), now standing at Tk 5.3 lakh crore and accounting for 27.09 percent of total outstanding loans. This surge, it said, poses a major threat to financial stability and further undermines investor sentiment.

Despite weakening business confidence, the central bank has maintained a high policy rate, which the DCCI argued is burdening borrowers—particularly cottage, micro, small, and medium enterprises (CMSMEs)—and hampering productivity across key sectors.

The central bank has also lowered its private sector credit growth target to 7.2 percent for the second half of the year, down from 9.8 percent in the previous period. This, the DCCI warned, will further restrict the capacity of businesses to operate and expand.

Meanwhile, the chamber expressed concern that the 20.4 percent public sector credit growth target could increase fiscal pressure and crowd out private investment.

To restore business confidence and enable a sustainable recovery, the DCCI called for simplified lending procedures, reduced interest rates, a six-month extension of loan classification deadlines, and broader structural reforms.