BB weighs 45% cap on corporate lending

Bangladesh Bank is considering setting lending targets for commercial banks next year to reduce their dependence on large corporate borrowers and boost credit to small and medium enterprises (SMEs) and retail customers.

Under the proposed framework, banks may be asked to allocate at least 20% of their total lend-ing to retail customers and 35% to SMEs, reducing corporate lending to 45% from the current 70%-80% in private commercial banks, central bank Governor Md Mostakur Rahman said while addressing the Fifth Bangladesh Economic Summit 2026, organised by a national business daily at a city hotel on Saturday.

The central bank is also working to attract foreign currency from expatriates by promoting non-resident convertible (NRC) accounts and removing the existing 15-year maturity ceiling on three types of expatriate bonds.

He said banks were not licensed solely to finance large corporations and that lending concen-tration needed to be addressed for a more balanced distribution of credit.

"I am talking to the managing directors and chief executive officers of banks on this issue. I think we can set a target for lending next year. We will request bankers to allocate at least 20% of their lending to retail customers and 35% to SMEs," he said.

He added that corporate lending, now accounting for 70%-80% of private banks' total lending, should fall to around 45%.

"The financing needs of large corporates should be met through the capital market," he said, adding that shifting corporate financing there would create purchasing power and help large industries sustain operations.

The proposed targets aim to diversify credit flows, expand financing for smaller businesses and reduce banks' excessive exposure to large corporate borrowers.

BB seeks more foreign currency through expatriate accounts

Bangladesh Bank is promoting NRC accounts to attract foreign currency from non-resident Bangladeshis and strengthen foreign exchange reserves. It is also conducting international campaigns for the accounts with support from the Asian Development Bank (ADB).

Mostakur Rahman said expatriates would be encouraged to deposit foreign currency in the domestic banking system through these accounts.

He said Bangladesh could attract substantial funds if the facility gained popularity. India had mobilised around $32 billion through similar accounts in four to five months, while Pakistan had attracted approximately $13 billion.

Bangladesh also wants to tap this potential, he said, adding that the central bank was working to ensure payments falling due under NRC accounts over the next three to four years would not put significant pressure on foreign exchange reserves.

15-year maturity ceiling on expatriate bonds may go

Bangladesh Bank is working to remove the 15-year maturity ceiling on three types of bonds available to non-resident Bangladeshis, giving expatriate investors greater flexibility.

Mostakur Rahman said the ceiling had been imposed around five years ago, limiting investment opportunities.

"We are working to make the maturity period unlimited," he said.

Investments in the three categories of expatriate bonds currently stand at around $606 million, he said, expressing hope that removing the restriction would attract more expatriate savings and increase dollar inflows into the domestic economy.

The move is also expected to strengthen foreign exchange reserves by bringing more expatri-ate savings into formal investment channels.

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Banks urged to channel excess liquidity into productive sectors

City Bank Managing Director and CEO Mashrur Arefin said banking reforms and efforts to re-store governance were gradually rebuilding public confidence in the financial system.

Commercial banks were holding around Tk4.82 lakh crore in excess liquidity, which should be channelled into productive sectors to accelerate growth, he said. Banks should prioritise credit quality rather than lending volumes and expand financing for SMEs, small entrepreneurs, retail businesses and consumers.

Arefin also called for bringing an estimated Tk1.87 lakh crore held outside the formal banking system into the mainstream economy, suggesting wider QR-code-based transactions as a means of doing so.

On the macroeconomic situation, he said foreign exchange reserves had risen to $30.12 billion under the IMF's BPM6 methodology.

Remittance inflows grew 14.2% between 1 July and 11 November of the current fiscal year, reaching nearly $13 billion, while exports grew 6%.

However, readymade garments accounted for around 80.7% of total export earnings, highlight-ing the country's heavy dependence on the sector.

Arefin called for establishing asset management or asset recovery companies to tackle rising non-performing loans and help banks clean up their balance sheets.

Business leaders seek sectoral support and fresh investment

Metropolitan Chamber of Commerce and Industry (MCCI) President Kamran T Rahman sought low-interest financing to revive the tea industry, saying producers had been selling tea below production costs for at least five years.

Bangladesh now produces more than 100 million kilograms of tea annually, up from around 30 million kilograms in 1972. However, rising electricity, gas and fertiliser costs have put produc-ers under growing financial pressure, he said.

Walton Hi-Tech Industries Managing Director SM Mahbubul Alam sought policy support to ex-pand electronics exports and low-cost financing to accelerate renewable energy adoption.

Southeast Bank Chairman MA Kashem urged the government to organise an international in-vestors' conference, similar to the one held in 1986, to attract foreign investment and restore confidence in the economy.

Such an initiative could showcase investment opportunities, encourage foreign investors and create fresh momentum for economic growth, he said.