Business leaders in Bangladesh have urged the central bank governor to reduce interest rates and significantly expand the Export Development Fund (EDF), among a broader set of policy proposals aimed at strengthening investment and industrial competitiveness.
The delegation met the Governor of the Bangladesh Bank, Mostakur Rahman, on Monday at the central bank headquarters, where they presented a series of demands focused on easing credit conditions, improving export financing, and stabilising the financial environment for private sector growth.
Following the meeting, Mohammad Alamgir, Secretary-General of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), briefed journalists, noting that the governor had responded positively to several of the proposals and assured gradual consideration of key reforms. Representatives from other major business associations were also present during the discussions.
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Push to expand export financing
A central issue raised during the meeting was the scaling up of the Export Development Fund (EDF), which provides foreign currency loans to exporters for importing raw materials. Business leaders stressed that the fund, once valued at around USD 7 billion, has now declined sharply to approximately USD 2.2 billion, limiting access to essential trade financing.
They proposed increasing the EDF to USD 5 billion in the first phase, with longer-term aspirations of reaching USD 8 billion. According to industry representatives, restoring the fund’s capacity is essential to maintaining export competitiveness amid global supply chain pressures.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the governor acknowledged the importance of expanding the fund but noted that previous reductions were influenced by conditions linked to the International Monetary Fund (IMF).
Interest rate and credit reform proposals
Business leaders also pressed for a reduction in interest rates, arguing that high borrowing costs are constraining private investment and industrial expansion. The FBCCI recommended stabilising interest rates and gradually reducing them to single-digit levels to improve competitiveness.
They further emphasised the need to redirect credit flow towards productive sectors, reducing reliance on government borrowing while ensuring stronger financing for private enterprises.
BKMEA representatives also raised concerns regarding loan classification rules. At present, borrowers may be declared defaulters after three months of non-payment. They proposed extending this period to six months. Additionally, they suggested preventing the automatic classification of related business entities as defaulters and called for extending loan rescheduling periods from the current 4–5 years to up to 10 years.
Key demands presented to the central bank
| Area of Reform | Business Proposal | Rationale |
|---|---|---|
| Interest rates | Gradual reduction to single-digit levels | Boost investment and competitiveness |
| EDF size | Increase from USD 2.2bn to USD 5bn (eventually USD 8bn) | Strengthen export financing |
| Loan classification | Extend default period from 3 to 6 months | Reduce pressure on borrowers |
| Loan rescheduling | Extend tenure to up to 10 years | Improve repayment flexibility |
| Credit allocation | Increase private sector lending | Support productive economic activity |
| Green financing | Low-interest loans for energy-efficient projects | Reduce industrial energy costs |
Green financing emphasis
The meeting also highlighted the importance of environmentally sustainable industrial growth. The FBCCI recommended introducing low-interest financing schemes for energy-efficient and eco-friendly projects to help reduce operational costs and improve long-term sustainability in the manufacturing sector.
Overall, business leaders described the discussions as constructive, with indications that several of the proposed measures may be reviewed in phases by the central bank.