The average amount of loans taken by households has doubled in the country. One-third of households are taking loans now. A latest Household Income and Expenditure Survey (HIES) of Bangladesh Bureau of Statistics (BBS) has revealed this.
BBS published the preliminary results of the Household Income and Expenditure Survey 2022. Mohiuddin Ahmed, deputy director of the organisation and project director of HIES-2022, highlighted various aspects of the survey in an event organised on this occasion at the BBS Auditorium in Agargaon of the capital. Planning minister MA Mannan was chief guest at the event.
According to the survey, 37 per cent of the families in the country have taken loans from a financial institution or friends in the last one year. During the survey from January to December last year, an average of 37.03 per cent of households reported loans or borrowings. In the 2016 survey, the rate of households who had been taking loans stood at 29.70 per cent. That means in the last 6 years, the families in the country who are taking loans have increased by more than 7.25 percentage points.
Since the beginning of the Russia-Ukraine war in February 2022, commodity prices around the world have spiralled abnormally. There is a dollar crisis in the country. This puts up the price of daily commodities in the country. Inflation increases. As a result, many middle-class, lower-middle-class and low-income people are forced to take loans. The BBS report has reflected the picture.
Apart from this, Bangladesh Bank data shows that people's borrowing through credit cards has increased last year.
According to BBS survey, in 2022 compared to 2016, the amount of loans per household has almost doubled. At the end of 2022, the average loan amount per family increased to 70,506 taka. In 2016, the amount of this loan was 37,743 taka. According to BBS survey, last year urban households borrowed more than rural people. In 2022, the average loan per household in urban areas was 131,395 taka. At the same time, the loan amount per family in rural areas was 41,921 taka.
Economists believe that the increase in the cost of living is one of the reasons for the increase in loans. Khondaker Golam Moazzem, research director of the Center for Policy Dialogue (CPD), told Prothom Alo, "There are three types of families in our country. One of them always suffers from an income-expenditure deficit. There is another group whose income is slightly higher than the expenditure. And the third group whose income is much higher than the expenditure is called surplus population.
"But all three groups have to borrow. The first is regular borrowing to balance income and expenditure. The second group borrows mainly to meet sudden needs in daily life. And the people of the surplus population borrow mainly to buy houses and cars. Because of this, BBS's survey has revealed that overall loans taken by families and the amount of loans have increased."
According to the BBS survey, more households in rural areas are taking loans than in the urban areas. In rural areas, an average of 39.35 per cent of families is taking loans. And in urban areas, this number is 32.11 per cent on average. However, in 2022, the number of borrowing families in urban areas increased more than in 2016. In 2016, the average household loan in urban areas was 22.10 per cent. And in rural areas that number was 32.70 per cent. In 2022, the number of households taking loans increased by an average of 10 percentage points in urban areas, and by 6.5 percentage points in rural areas.
Khondaker Golam Moazzem said, "In addition to the development of the economy and the increase in financial capacity, the ability or tendency of people to take loans also increases. This is more common in urban areas. Because of this, we are seeing the use of consumer loans and credit cards in the financial sector increasing.”
Regarding the reasons why urban people borrow more than rural people, the researcher said, "The cost of living in our country is higher than in other underdeveloped countries. Again there is a huge disparity between our standard of living and the cost of living. We live a low quality life at high cost. Due to this, the need for borrowing has increased among a class of urban people. In addition, there is pressure of inflation and spike in product prices.”