BB lowers private credit growth target to 6.8%
The Bangladesh Bank (BB) has lowered its private sector credit growth target to 6.8 percent by the end of December this year, against the backdrop of sluggish demand.
Overall credit growth -- a broader measure spanning private and public sector borrowing -- is expected to reach 8 percent by the end of June 2027, BB said in its Monetary Policy Statement (MPS) for the July-December 2026 period, citing subdued investor appetite during the economy's slow recovery phase.
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The projection, announced today at the BB headquarters, is well below the 8.5 percent target the central bank had set for private credit growth by June 2026 in its previous MPS for January-June.
As per the latest MPS, actual credit flow fell far short of that target: growth slowed to 5 percent in May, as banks turned increasingly cautious amid rising loan defaults and economic uncertainty.
BB said restrictive financial conditions, coupled with broader economic uncertainties, have dampened private sector credit demand. Commercial banks have adopted a cautious lending posture due to elevated loan defaults and increased government borrowing requirements.
BB now estimates private credit growth will reach only 5.5 percent by the end of June.
To counter the credit crunch and stimulate recovery, BB has unveiled a Tk 60,000 crore stimulus package targeting core industries, agriculture, and CMSMEs.
Of this, Tk 41,000 crore will be sourced from surplus banking sector liquidity, with the remaining Tk 19,000 crore funded directly from BB's internal reserves -- a structure designed to limit the inflationary impact of the liquidity injection.
The package is projected to generate nearly 25 lakh direct and indirect jobs while reviving industrial output, BB added.
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