Dhaka Chamber of Commerce and Industry has expressed concern over the central bank's decision to maintain a contractionary monetary policy until June 2025, keeping the policy rate unchanged at 10 per cent.
Terming the Bangladesh Bank's stance rigid for curbing inflation, the trade body said it would hamper private-sector credit growth and economic expansion.
It also called upon the regulator to adopt a more flexible and balanced monetary policy, closely monitor its impact on inflation and growth, and implement targeted measures to boost private-sector credit flow.
According to the DCCI, any contractionary stance for a longer period with a high policy rate will hamper private-sector growth.
"The private sector relies heavily on banks for investment, and high interest rate raises production cost, thus fuelling inflation. With inflation easing to 9.94 per cent in January 2025 from 10.89 per cent in December 2024, it remains above the desired level," said the DCCI in a statement on Monday.
The DCCI is also concerned about the decision to maintain the private-sector credit growth target at 9.8 per cent for the January-June period in FY25, while actual growth fell to 7.3 per cent in the first of 2025, the lowest in 12 years.
It said the public-sector credit growth surged from the 14.2 per cent target to 18.1 per cent in December 2024, requiring curbs through austerity measures.
"To restore private-sector confidence and business operations, credit growth must reach double digits," added the trade body.
The DCCI urged the Bangladesh Bank to introduce sector-specific funds and entrepreneurial support programs to boost credit flow, as restrictive monetary policies risk further economic stagnation.
"Although the central bank implemented the market-based exchange rate, yet the traders (export and import) had to buy US dollar at higher price with different rates," it continued.
"This discrepancy must be addressed to ensure consistency, benefiting all stakeholders, including traders and remitters," it maintained.
The DCCI also criticised the central bank for not taking sufficient steps to strengthen banking governance amid the liquidity crisis and rising NPLs.
"While the adoption of the ECL methodology under IFRS 9 from 2027 is a positive move, there is a limited focus on implementing governance," it added.
Without stronger governance and faster legal resolutions, according to the DCCI statement, the banking sector will remain vulnerable and hindering private-sector growth and economic resilience.
It further said that Bangladesh could achieve its economic growth and stability in the days to come by fostering an environment conducive to investment and ensuring macroeconomic stability.
talhabinhabib@yahoo.com
