Formal credit disbursement in rural Bangladesh has sharply declined, while deposit collection also continues to shrink—raising concerns over growing urban-rural financial disparities.

Bangladesh Bank data shows that, as of March 2025, rural areas accounted for just 7.98% (Tk 1.37 trillion) of the country’s total bank lending of Tk 17.13 trillion, down from 12.02% in June 2023. Meanwhile, urban areas absorbed over 92% of total loans.

Deposit mobilisation in rural regions has also fallen, with their share dropping from 21.27% (Tk 3.59 trillion) in June 2023 to 7.98% (Tk 3.01 trillion) by March 2025.

Bankers blame the slump on rising interest rates, inflation, and post-pandemic economic fatigue, which have dampened demand for credit and increased production costs for rural entrepreneurs.

“Under current conditions, it’s tough for rural entrepreneurs to stay competitive,” said Mosleh Uddin Ahmed, Managing Director of Shahjalal Islami Bank. He noted that agriculture loan rates have risen from 8% to over 12% in recent years.

Banks are also closing or freezing rural branches to cut costs, shifting to agent banking instead. The number of rural outlets has remained stagnant for months.

While refinancing schemes for small enterprises were introduced after Covid-19, they’ve since lapsed without renewal, further squeezing access to credit.

Experts warn that this growing neglect of rural finance could hurt balanced economic growth and deepen inequality if left unaddressed.