Dhaka: Bangladesh Bank Governor Md Mostaqur Rahman emphasized on Monday the necessity for a stronger emphasis on cottage, micro, small, and medium enterprises (CMSMEs) alongside the agriculture sector to bolster economic growth and employment rates. The governor’s remarks came during a courtesy visit by a delegation from the Dhaka Chamber of Commerce and Industry (DCCI), led by its President Taskeen Ahmed, at the central bank headquarters in Motijheel.
According to United News of Bangladesh, Governor Rahman pointed out the economy’s current over-reliance on a narrow range of products, services, and export markets, highlighting the critical need for economic diversification through CMSMEs and agro-based sectors. “This will help stimulate the domestic economy and generate employment,” he stated, noting that high logistics and product management costs are significant contributors to ongoing inflation.
The governor addressed broader macroeconomic issues, noting that Bangladesh’s GDP growth has been underwhelming, impacting both foreign and domestic investment. He remarked, “There is no alternative to reforming business and trade policies and reducing the cost of doing business.”
During the meeting, DCCI President Taskeen Ahmed expressed concerns regarding the slowdown in private sector credit growth, which has plummeted to 6.03 percent, the lowest in 22 years. Taskeen noted that the current policy rate of 10 percent has elevated lending rates to approximately 16-17 percent, indicating a liquidity crunch in the banking system and making financing increasingly expensive and less accessible, particularly for SMEs and manufacturing industries.
To mitigate these challenges, Taskeen proposed a gradual reduction in the policy rate to decrease borrowing costs and stimulate private investment. He also recommended the introduction of subsidized credit facilities for priority sectors, including manufacturing, export-oriented industries, and SMEs.
Taskeen further highlighted that a significant spread between lending and deposit rates, exceeding 5 percent, has diminished investor confidence and led to a decline in private investment. He stressed the importance of restoring confidence in the financial sector by advocating for stronger governance in banking and financial institutions.
Moreover, Taskeen raised concerns over recent changes to the loan classification policy, where the timeframe was reduced from nine months to three months, adding pressure on businesses already facing high costs, energy shortages, and weak demand. In response, he proposed extending the loan classification period to at least six months and reconsidering loan rescheduling facilities for unintentional defaulters.
The meeting was attended by DCCI Senior Vice President Razeev H Chowdhury, Vice President Md Salem Sulaiman, board members, and senior officials of Bangladesh Bank.