Dhaka, Nov. 3 -- Formal credit growth for the private sector fell to a historical low of 6.29 per cent in September, signalling a deep slowdown in the country's business activities.

The decline is attributed to banks becoming more cautious amid rising non-performing loans (NPLs) and private borrowers losing their credit appetite due to multiple anti-business factors, including the energy crisis, lawlessness, higher lending costs, exchange rate shocks, and potential political uncertainty ahead of next year's general election.

Data from Bangladesh Bank (BB) on private sector credit growth, available since 2003, shows that credit growth has never dropped this low, even during previous financial shocks.

According to BB, outstanding loans t...