Rising inflation and stagnant incomes have forced people to rely increasingly on loans from banks, neighbours, and relatives.
According to the latest Bangladesh Bank report, consumer debt rose by about 26 per cent in the past year - nearly three times higher than the growth in industrial loans. Many households are now borrowing not only for homes and cars but also to cover daily expenses.
Loans are being taken for medical treatment, weddings, and even routine household costs. Alongside credit card and salary account loans, borrowing against DPS, FDR, and provident fund liens has also surged.
The demand for loans to purchase appliances such as air conditioners, televisions, refrigerators, washing machines, computers, and furniture continues to grow. Essentially, middle- and upper-middle-class families are borrowing to maintain their lifestyle and consumption patterns as living costs soar while incomes stagnate.
Due to higher interest rates and relatively low default risks, banks have also shown greater interest in expanding consumer lending, according to Bangladesh Bank sources.
Economists, however, caution that consumer loans typically fund unproductive sectors. A sharp rise in such credit could fuel inflation. Hence, experts urge tighter control over consumer credit, which does not directly contribute to investment in the productive sector.
Former Director General of the Bangladesh Institute of Bank Management (BIBM) Dr. Toufiq Ahmed Chowdhury said that while people's incomes have not increased, their expenses have. "As a result, people are taking loans not only to buy consumer goods but also to keep their families afloat," he said. "Although it offers short-term relief, it will exert long-term pressure on both families and the economy."
He added that higher consumer credit increases money circulation, which in turn intensifies inflationary pressures. Meanwhile, the slowdown in industrial credit growth sends a negative signal for the economy, hampering investment and job creation.
The cost of living has soared across sectors - from food and clothing to housing, healthcare, and education. Consequently, households across income groups are struggling to balance expenses with earnings.
A recent study titled "Economic Dynamics and Mood at Household Level in Mid-2025" by the Power and Participation Research Centre (PPRC) found that both poor and middle-class families are spending more than they earn. A large portion of household expenditure goes toward food - nearly 55 per cent of total monthly spending. The costs of education and medical care are also rising sharply.
As expenses outpace income, some families are depleting their savings while others are turning to borrowing. The study found that family debt has increased by at least 40 per cent in the past year.
At the report's launch, PPRC Executive Chairman Dr. Hossain Zillur Rahman said the country is grappling with three overlapping crises - the COVID-19 pandemic's aftereffects, persistently high inflation, and ongoing political-economic uncertainty. "The July mass uprising brought renewed hope, but also a sense of unpredictability," he said. "Bangladesh has been navigating a series of critical realities for several years, which have affected income, expenditure, and poverty levels."
As of June 2025, the consumer credit balance in banks rose to Tk 1,72,621 crore, compared to Tk 1,36,904 crore a year earlier - an increase of Tk 35,717 crore or 26.08 per cent.
This growth rate is nearly three times higher than overall private sector and industrial credit growth. Between April and June 2025 alone, consumer credit jumped by Tk 25,176 crore.
During the same period, industrial credit stood at Tk 7,27,633 crore, up from Tk 6,68,232 crore a year earlier - an 8.88 per cent rise. Overall private sector credit grew by 8.54 per cent, or Tk 1,37,070 crore, over the year.
Showkat Aziz Russell, President of the Bangladesh Textile Mills Association (BTMA), said, "There are no new industrial loans now. Projects are planned, but banks cannot finance them. Investment opportunities are disappearing. Political instability has made entrepreneurs hesitant - many have left the country or gone into hiding. This stagnation is hurting trade, business, and investment."
By June 2025, housing loans rose to Tk 31,437 crore, up from Tk 22,805 crore a year earlier - a 37.85 per cent increase. Loans for purchasing motor vehicles and motorcycles surged to Tk 6,602 crore, from Tk 4,167 crore, marking a 58.43 per cent rise.
Borrowing through credit cards and salary accounts has also spiked. Loans against salary accounts grew by Tk 1,256 crore between April and June alone, and by Tk 552 crore over the year. Credit card debt rose to Tk 12,193 crore, compared to Tk 10,805 crore last June - up Tk 1,388 crore in one year.
Debt against FDR liens climbed by Tk 5,170 crore, of which Tk 2,692 crore came in just three months. Loans under DPS liens rose by Tk 809 crore, while those under provident fund liens went up by Tk 1,648 crore.
In line with changing consumption patterns, more people - even in rural areas - are buying consumer durables like ACs, TVs, computers, refrigerators, and furniture. Consequently, loans for these items increased to Tk 44,652 crore, up from Tk 36,130 crore last year - a jump of Tk 8,522 crore or 23.58 per cent.
