In a significant policy dialogue aimed at revitalising Bangladesh’s investment climate, leading business figures have called for a reduction in bank lending rates, alongside a series of broader financial reforms to stimulate industrial growth and enhance export competitiveness.
The proposals were presented on Monday during a high-level meeting held at the headquarters of Bangladesh Bank. The Governor of the central bank met with representatives from the country’s two major trade bodies, including the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
During the discussions, business leaders argued that persistently high interest rates are acting as a major constraint on private sector expansion. They warned that elevated borrowing costs are increasing production expenses, thereby eroding competitiveness in global markets at a time when export-driven industries are already facing multiple external pressures.
A central demand from the business community was the gradual reduction of interest rates to a single-digit level. According to them, such a move would significantly improve access to credit, encourage fresh investment in manufacturing, and generate much-needed employment opportunities across the economy.
The Export Development Fund (EDF) also featured prominently in the discussion. Business representatives noted that the size of the fund, which once stood at nearly USD 7 billion, has now contracted to approximately USD 2.2 billion. They proposed a phased expansion of the fund to USD 5 billion in the first instance, with a longer-term target of USD 8 billion, in order to ensure adequate and affordable financing for export-oriented industries.
In addition, the delegation pressed for reforms in loan classification rules. At present, loans are typically classified as non-performing after three months of non-payment. The business leaders recommended extending this threshold to six months, arguing that the existing framework places undue stress on otherwise viable enterprises. They also called for the removal of provisions that automatically classify associated companies as defaulters when a single entity within a group falls into default.
Further proposals included extending the loan rescheduling period from the current four to five years to as long as ten years. This, they argued, would provide struggling firms with sufficient breathing space to recover and maintain operational stability.
Energy cost reduction and the introduction of preferential low-interest financing for environmentally sustainable projects were also discussed, reflecting a growing emphasis on green industrialisation.
A summary of the key proposals is presented below:
| Area | Current Situation | Proposed Reform |
|---|---|---|
| Bank interest rates | Relatively high | Gradual reduction to single digit |
| Export Development Fund | ~USD 2.2 billion | Increase to USD 5–8 billion |
| Loan default classification | 3 months overdue | Extend to 6 months |
| Loan rescheduling period | 4–5 years | Extend to 10 years |
| Private sector credit flow | Limited growth | Strong expansion encouraged |
Following the meeting, business representatives stated that the Bangladesh Bank Governor responded positively to several of the proposals, expressing willingness to consider phased implementation where feasible. This has generated cautious optimism within the business community.
Economists observing the developments suggest that, if implemented, the proposed reforms could mark a meaningful shift in monetary and credit policy, potentially boosting industrial output, strengthening exports, and accelerating job creation across key sectors of the economy.