Bangladesh Bank Recognized Globally for Youth Financial Inclusion

A study published in Nature Portfolio reveals that increased access to credit is driving rural transformation in Bangladesh by boosting agricultural productivity and creating non-farm employment opportunities. The research, based on data from the Bangladesh Household Income and Expenditure Survey (HIES) across three waves (2005, 2010, 2016), highlights that mean credit disbursements per household rose from Tk 12,116 in 2005 to Tk 27,616 in 2016, while the proportion of households with credit access increased from 26.2% to 35.8%.

Banks have disbursed Tk 19,215 crore in agricultural and rural credit, achieving 50.57% of the target set by Bangladesh Bank for FY2024-25, which is Tk 38,000 crore. However, some banks are underperforming, with Padma Bank and Woori Bank failing to disburse any loans, while Madhumoti Bank, Union Bank, and HSBC have disbursed less than 10% of their targets.

Bangladesh Bank has set a new deadline for banks and non-bank financial institutions (NBFIs) to submit monthly loan data by the 15th of the following month, replacing the previous deadline of the 20th. Any delay will result in a fine of up to Tk 5 lakh. The Credit Information Bureau (CIB) stressed the importance of accurate and timely loan reporting to maintain credit discipline in the banking sector.

As of December 2024, Bangladesh's banking sector faced a provision shortfall exceeding Tk 1 lakh crore, marking a 337% increase in six months. The shortfall reached Tk 1,06,130 crore, up from Tk 55,378 crore in September and Tk 31,549 crore in June. Private banks saw the most alarming rise, with the shortfall tripling to Tk 48,883 crore in December from Tk 15,831 crore in September.

The inter-bank call-money rate slightly declined to 10.02% on Wednesday from 10.03% the previous day following a 50-basis-point cut in the daily cash reserve requirement (CRR). The rate had been 10.05% a week prior. While the call rate remained between 9.75% and 11.00%, most deals settled at 10.00%-10.50%.

Bangladesh's banking sector faces a growing crisis, with non-performing loans (NPLs) reaching Tk 3.45 trillion by the end of 2024, accounting for 20.20% of total loans. Despite having court decrees in their favor, banks and non-bank financial institutions (NBFIs) struggle to recover default loans due to challenges in selling mortgaged properties at auction.