Following the ouster of the Awami League government in August last year through a student-people's mass uprising, a wave of stagnation swept through the private sector in Bangladesh.
New investments have declined significantly, while many existing factories have been forced to shut down, triggering a severe employment crisis.
Due to financial constraints, nearly one-fourth of the country’s banks have halted loan disbursements, while others are shifting focus toward investing in government bills and bonds rather than private lending.
As a result, private sector credit growth has dropped to its lowest level on record.
According to data from the Bangladesh Bank’s website, private sector credit growth stood at just 6.4 per cent at the end of June, which is the lowest in the past 22 years.
Against this backdrop, the central bank is set to announce the monetary policy for the first half (July–December) of the 2025–26 fiscal year on Thursday.
Individuals associated with the sector said controlling inflation and stimulating the private sector is a key responsibility of the central bank, but the regulator is paying little attention to the private sector.
As a result, some well-performing firms are turning into defaulters and gradually shutting down. The central bank should address this.
Since 5 August of last year, many businesses known to be closely linked with the former ruling Awami League have scaled down or shut operations.
Of the 14 banks that underwent broad changes following the political changeover, some have entirely halted lending while others are offering it in a limited capacity.
At least five of these banks are reportedly struggling to meet deposit withdrawal demands.
Among the banks, nine were previously under the control of Saiful Alam (S Alam), a close associate of ousted Prime Minister Sheikh Hasina, while one was linked to her adviser Salman F Rahman and two were linked to former land minister Saifuzzaman Chowdhury.
According to bankers, at least 20 garment and textile factories owned by Salman F Rahman’s Beximco Group have shut down, leaving nearly 40,000 workers unemployed.
The factories were denied further loan facilities after defaulting on existing debts. Beximco Group owes around Tk 500 billion to 16 banks and 7 non-bank financial institutions through its 78 entities.
Multiple factories owned by S Alam Group have also closed, along with several firms under Infinia Group – run by S Alam’s son Ahsanul Alam – and Unitex Group, led by his son-in-law Belal Ahmad.
Collectively, S Alam-linked loans across various banks exceeded Tk 1.5 trillion. Besides, the Bashundhara Group has also shut down multiple factories.
In Chattogram alone, 50 factories, including those producing garments, yarn, and footwear, have shut down in the seven months since 5 August. The majority closed due to financial crisis.
According to Bangladesh Bank officials, around 1,200 industrial institutions applied to regularise their loans. Among them, around 100 institutions, including some run by businessmen affiliated with the BNP, have already been restructured under special consideration.
No decision has been made regarding whether the remaining 1,100 institutions will be granted similar opportunities. Most of these loans are classified as defaults, and many of the companies have halted production.
The interim government, after assuming power, introduced several measures to stabilise the distressed economy. Siphoning of funds from banks has largely been curbed, but businesses are not satisfied with the law and order situation. Interest rates on loans and the volume of defaulted loans have both increased. As financial sector reforms continue, lending for new projects remains restricted.
Industry insiders noted that since the Awami League's fall on 5 August, credit growth has declined every month. In July last year, private sector credit growth was 10.13 per cent, which dropped to 7.28 per cent by December, and fell further to 7.15 per cent in January. It reached 6.82 per cent in February, briefly rebounded to 7.17 per cent in May, but slumped again to 6.4 per cent in June.
When asked what the focus of the upcoming monetary policy should be, former chief economist of Bangladesh Bank, Mustafa K Mujeri, told Prothom Alo, “The prime target of the central bank is curbing inflation, and it is focusing more here. Given the current situation, nothing in the country is in order. This government is becoming a failed one. No investor would invest now. However, those who have defaulted should be granted policy support. Besides, there should be initiatives to keep interest rates within a tolerable range.”