Private-sector credit growth in Bangladesh fell to 7.66% year-on-year in November 2024, down from 8.30% in October, mainly due to reduced demand for trade financing amid ongoing economic and political uncertainties, according to the central bank’s latest data.

The figure is 2.14 percentage points lower than the Bangladesh Bank’s target of 9.80% for the first half of FY25. Bankers attribute the slowdown to high lending rates of 14-15% and a cautious stance by businesses wary of financial risks.

Fresh import orders through letters of credit (LCs) rose marginally by 0.05% to $28.12 billion during July-November FY25, but actual LC settlements fell by 0.83% to $27.94 billion, reflecting weak trade activity.

Bankers say political instability, including the fall of the Sheikh Hasina government in August and recent floods, has dampened investment sentiment. Banks have adopted conservative lending practices, focusing on adequate collateral to minimize risks. A senior central bank official expects credit growth to improve slightly in December as the situation stabilizes.

Despite the slowdown, private-sector loans increased to Tk 16,643.24 billion in November 2024 from Tk 16,562.02 billion in October, indicating some ongoing borrowing activity.