Dhaka: Dhaka Chamber of Commerce and Industry (DCCI) President Taskeen Ahmed on Wednesday highlighted a paradox in Bangladesh's banking sector, where banks are maintaining record levels of excess liquidity, yet private sector entities, especially industries and CMSMEs, are finding it difficult to access credit, thus stalling investment and growth. He shared these insights during his presentation of a paper titled 'Synergising the Banking Sector: Lenders' and Borrowers' Perspective' at a focus group discussion at the DCCI auditorium.
According to United News of Bangladesh, the presentation revealed that total liquid assets in the banking system have escalated to Tk 6,26,044.90 crore, with excess liquidity at Tk 3,21,255.47 crore. This situation suggests that banks are stockpiling funds as a safeguard against credit risk rather than utilizing them for productive lending. Concurrently, private sector credit growth has decelerated to 6.03%, showing a contraction in lending despite a strong increase in deposits.
The paper also noted a rise in the overall non-performing loan (NPL) ratio to 31.2% by December 2025, alongside a significant year-on-year decline of over 50% in industrial loan recovery, which is placing stress on the real economy. Overdue industrial loans have reached Tk 71,066.82 crore, with CMSME overdue loans comprising 35.43%, underscoring the growing financial strain on borrowers.
Taskeen Ahmed observed that the increase in NPLs, deficiencies in capital, and stricter risk governance have led banks to adopt a more defensive approach to lending. Capital shortages in 23 banks, amounting to Tk 2.82 lakh crore, have heightened risk aversion, thereby slowing credit disbursement and restricting access to finance in productive sectors.
He further highlighted the growing gap between public and private sector credit. Government borrowing from banks surged to Tk 73,035 crore during July-January of the fiscal year 2025-26, a sharp increase compared to Tk 9,442 crore during the same period in FY25, further constraining private sector lending.
From the borrowers' standpoint, the presentation pointed out severe revenue pressures, high lending rates, and restricted access to working capital. With the policy rate at 10%, lending rates have risen to approximately 14-15%, thus increasing repayment burdens and deterring new investments, particularly for SMEs with thin margins.
The paper warned of a vicious cycle in the banking sector, wherein rising defaults lead to more stringent lending standards, which in turn limit business activities and weaken repayment capabilities, creating more NPLs and causing further credit tightening.
To mitigate these issues, Taskeen proposed a three-pillar 'synergy framework' focusing on stabilizing the banking system, expanding credit, and enhancing governance. Key recommendations included enforcing NPL reduction targets, prosecuting wilful defaulters, restoring capital adequacy, and completing asset quality reviews of vulnerable banks.
He also advocated for reducing SME lending rates via credit guarantee schemes, expanding digital financial inclusion, diversifying lending portfolios, and developing alternative financing channels to alleviate pressure on bank financing.
The DCCI president emphasized the importance of implementing risk-based supervision, strengthening cybersecurity, investing in digital credit infrastructure, and enforcing Basel III compliance to ensure the long-term resilience of the banking sector. He concluded by asserting that stronger coordination between lenders and borrowers is crucial to restoring confidence, reviving private investment, and supporting sustainable business growth in Bangladesh.