The outstanding loans and advances by scheduled banks in the transport sector saw a consistent decline over the last year, reflecting a slowdown in borrowing and cautious lending by banks.
Transport loans included road transport (excluding personal vehicles and lease finance), water transport (excluding fishing boats), and air transport, according to the Bangladesh Bank (BB).
According to the latest central bank data, the outstanding transport loans stood at Tk 108.83 billion in April-June 2025, down from Tk 115.23 billion in April-June 2024, marking a year-on-year decline of 5.55 per cent.
Over this one-year period, the total outstanding transport loans fell by Tk 6.40 billion.
The transport sector loans fell by 1.23 per cent to Tk 108.83 billion in the April-June 2025 quarter compared to the previous one.
This marked the fourth consecutive quarter of decline.
In the previous quarter of January-March 2025, the sector's outstanding loans stood at Tk 110.18 billion.
The downward trend began earlier, with loans standing at Tk 111.14 billion in October-December 2024 and Tk 113.50 billion in July-September 2024.
The peak in recent years was recorded in April-June 2024, when transport sector loans reached Tk 115.23 billion.
The sharpest decline in a single quarter was seen in October-December 2024, when loans dropped by 2.08 per cent, as per the central bank data.
Bank insiders and experts say the steady fall in transport sector loans reflects both cautious lending and weak investment appetite.
They note that several major operators have exited the market following the July 2024 political transition, while the broader economy has yet to regain momentum.
According to them, the sustained decline is not only a result of banks tightening credit due to risk concerns but also a sign of sluggish growth in transport logistics - an essential driver of competitiveness.
The fall in lending may delay fleet expansion and modernisation, and investment in freight logistics and supply chain capacity, they say.
Experts stress that restoring political and economic stability is crucial to reviving confidence among lenders and borrowers.
They also call for targeted financing schemes for buses, trucks, and commercial vehicles to strike a balance between financial discipline and supporting growth in the sector.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, observes that the recent political transition following the July revolution has reshaped the country's business landscape, forcing several major players in the transport sector to exit the market.
He notes that the broader economy is yet to regain its expected momentum, which has had a direct impact on the demand for transport financing.
"Leasing companies played a significant role in funding the sector," he explains.
According to Rahman, banks are now adopting a far more cautious stance on disbursing loans to transport operators.
"Transport and logistics are highly sensitive to both political and economic stability. Without stability, investments are delayed, demand weakens, and lenders hesitate to take on new exposure," he explains.
He stresses that restoring confidence among financial institutions and businesses alike will be crucial for the transport sector to recover its growth trajectory.
"Stability is the bedrock. Once both political and economic conditions stabilise, we will see stronger demand for loans and a revival of transport sector investments," he adds.
Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, says, "The continuous decline in transport sector loans over the past year is a clear signal that both banks and borrowers are adopting a more cautious approach. This is also indicative of slow development in the transport logistics sector, an important determinant of business competitiveness."
The sustained drop in lending could slow down fleet expansion and modernisation in the transport industry, including freight logistics and supply chain capacity, he says.
Banks may be tightening credit due to risk concerns, but policymakers should also consider facilitating targeted financing solutions for transport operators, especially for buses, trucks, and other commercial vehicles that play a critical role in the country's logistics and public transport systems, he also says.
"It is important to strike a balance between prudent lending and supporting the sector's growth. If the decline continues, it could impact investment in new vehicles, fleet upgrades, and overall transport efficiency," says Dr Reaz.
A collaborative approach involving regulators, financial institutions, and industry stakeholders is necessary to ensure that the transport sector remains both financially sustainable and growth-oriented, according to him.
Overall, this trend underscores the need for strategic policy interventions to support sustainable credit flow while maintaining financial discipline in the sector, he adds.
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