SME Lending in Bangladesh Hits Four-Year Low Amid Political Uncertainty and Economic Slowdown

Strategic Insights -

Lending to small and medium-sized enterprises (SMEs) in Bangladesh has reached a four-year low, with banks disbursing Tk 2.05 lakh crore in SME loans during fiscal year 2024-25, down 9 percent from the previous year, according to Bangladesh Bank data. This downturn is attributed to political uncertainty, economic slowdown, and high inflation, as well as the fragility of nearly a dozen banks, which has limited credit availability for small and micro businesses.

Key Takeaways:

  • SME lending has dropped to a four-year low, with Tk 2.05 lakh crore disbursed in 2024-25, down 9 percent from the previous year, as per Bangladesh Bank data.
  • Businesses are focused on survival rather than expansion due to uncertainty, said Syed Abdul Momen, additional managing director and head of SME Banking at BRAC Bank PLC.
  • SMEs, which include around 78 lakh cottage, micro, small, and medium enterprises, are the backbone of Bangladesh's industrial sector and contribute roughly one-fourth of the country's GDP.
  • Lending to SMEs had been steadily growing since 2021, following a dip in 2020 due to Covid-19 restrictions.
  • Bankers attribute the weak loan demand to political uncertainty, slow economic growth, high inflation, and the fragility of nearly a dozen banks.
  • Outstanding SME loans stood at Tk 3.10 lakh crore as of June 2025, slightly up from a year earlier.
  • Some banks have collapsed due to loan irregularities and are barely active now, said Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC.
  • Around 10-12 banks, including several shariah-based ones, were once active in SME financing but are no longer participating.

Sources:

  • Bangladesh Bank (BB) data.
  • The New Nation, "SME lending in Bangladesh hits four-year low amid political uncertainty, economic slowdown".
  • Syed Abdul Momen, additional managing director and head of SME Banking at BRAC Bank PLC, The New Nation.
  • Kamrul Mehedi, deputy managing director and head of SME and Agent Banking at City Bank PLC, The New Nation.
  • Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, The New Nation.
  • Salekeen Ibrahim, executive vice president of Eastern Bank PLC, The New Nation.