Businessmen are blamed whenever defaulted loans increase in the country. But not all the blame should be on them, said Bangladesh Chamber of Industries (BCI) president Anwar-ul Alam Chowdhury (Parvez).
He also said: “The business environment is not entrepreneur-friendly now. Entrepreneurs have to take new loans to repay their previous loans. This further increases the risk of default.”
The Centre for Macroeconomic Analysis (CMEA) of the Policy Research Institute of Bangladesh (PRI), in partnership with the Department of Foreign Affairs and Trade (DFAT) of the Australian Government, hosted the August-September edition of its Monthly Macroeconomic Insights (MMI).
The report shows that the fragile recovery from poverty and inequality poses a major challenge for the incoming elected government. The recent rise in imports suggests that the economy is beginning to regain momentum.
Monzur Hossain, member (secretary) of the General Economics Division (GED), Bangladesh Planning Commission, graced the session as Chief Guest.
He emphasized that investment depends on the overall economic ecosystem and cannot be revived overnight. The tight monetary policy should be relaxed moderately to encourage investment growth. Although the government is not interfering with the central bank’s decision to maintain a high policy rate, it is worth asking how long such a stance can be sustained.
Parvez further said that earlier the time limit for classifying loans was six months. Now it has been reduced to three months. As a result, if a loan cannot be repaid within three months, it is considered a default.
He mentioned that this policy change is also one of the reasons for the increase in defaulted loans.
The BCI president called for improving the law-and-order situation, resolving the energy crisis, ending ‘mob culture’, and ensuring policy support to improve the business environment.
He said that if these are not fixed, the defaulted loans will increase further.
The keynote address was delivered by PRI principal economist Ashiqur Rahman.
He said that the current amount of defaulted loans in the country stands at Tk644,000 crore, which is about 36% of the total disbursed loans.
However, the total amount of distressed assets could reach Tk950,000 crore, which indicates the weakness of asset recovery in the banking sector.
He warned that high defaulted loans could create a credit crunch in the future and have a negative impact on investment.
Zaidi Sattar, chairman of PRI, chaired the event.
He highlighted that US-Bangladesh trade was determined in the past by competitive advantage driven by comparative advantage in a labor-intensive garment and other products.
That principle is now violated by the new reciprocal tariff regime, which talks about a relative tariff advantage rather than the relative comparative advantage, he added.
M Masrur Reaz, chairman and CEO of Policy Exchange of Bangladesh, cautioned that without new greenfield investments, job creation will remain constrained.
He pointed to the BBX Report 2024–2025, which classified Bangladesh as a “red” business environment, emphasizing the need for institutional reform and better risk management in the banking sector.
Park Young Sik, ambassador of the Republic of Korea to Bangladesh, echoed the importance of central bank independence and tax reform in ensuring macroeconomic stability under the next government.
Owais Perry, country economic adviser at UNDP, emphasized that in developing countries, monetary policy alone cannot tame inflation—supply-side measures must play a stronger role.
Khurshid Alam, executive director, PRI, concluded by noting that while economic stabilization is underway, true sustainability requires balancing growth with structural resilience.
The recent rise in LC openings for capital machinery is encouraging—it signals renewed investor confidence in long-term prospects, he added.
