22/05/2025
Sylhet’s Banking Sector at a Crossroads: From Economic Pressure to Strategic Opportunity
By Moammir Chowdhury
Banking & Development Analyst | Desh Consultancy
The Problem
Sylhet – one of Bangladesh’s most remittance-dependent regions – is now facing a perfect storm:
• Foreign remittance inflows are slowing due to global inflation, informal channel usage (hundi), and policy misalignment.
• Industrial development remains minimal, with less than 30% of local deposits reinvested in Sylhet, the lowest in the country.
• A recent government transition (May 2025) has added political uncertainty, with higher interest rates, low credit appetite, and investment delays.
Together, these dynamics are eroding customer trust, constraining loan growth, and placing Sylhet’s banking sector in a defensive posture.
Why It Matters
Banks in Sylhet are flush with deposits – largely from remittances – yet they lack viable lending outlets. Local entrepreneurs face high barriers to accessing credit. Meanwhile, rural customers remain underbanked, and diaspora confidence is fragile.
If no corrective action is taken, Sylhet risks deeper financial exclusion, regional disparity, and economic stagnation.
Strategic Growth Plan
A recent analysis outlines a two-phase plan for turning this crisis into an opportunity:
1. Short-Term Stabilization (3–6 Months)
• Mobilize Remittances
Partner with exchange houses and diaspora associations. Promote the government’s remittance incentives and improve rate transparency.
• Retain and Grow Deposits
Introduce high-yield short-term savings products. Engage schools, mosques, and cooperatives for group deposits.
• Support for SMEs and Farmers
Use refinance schemes to offer safe loans for agriculture and small businesses. Offer remittance-backed personal credit lines.
• Tighten Risk Management
Create branch-level recovery taskforces to address bad loans and reinforce compliance amid stricter regulatory scrutiny.
• Push Digital Banking
Train customers, reduce footfall, and improve efficiency via mobile and internet banking services.
2. Medium-Term Expansion (6–18 Months)
• SME & Sector-Specific Financing
Prioritize tourism, agro-processing, and local manufacturing through targeted SME loan products.
• Engage the Diaspora as Investors
Launch products like “Sylhet Development Bonds” and NRB mortgage financing. Tap emotional and economic ties to the region.
• Strengthen Financial Inclusion
Expand agent banking in rural and underserved areas. Promote account opening via e-KYC and mobile platforms.
• Empower Local Branches
Decentralize small loan approvals. Train staff in SME appraisal and relationship management.
• Increase Community Trust & Visibility
Organize Sylhet investment fairs, sponsor local initiatives, and build a reputation as a community-focused bank.
The Goal
• Increase loan-to-deposit ratio from 29% to 40%+
• Grow remittance inflow through formal channels
• Expand the SME loan book and diaspora-linked products
• Improve financial inclusion in rural Sylhet
• Build a future-ready branch network with digital capability and community trust
The Path Forward
Sylhet’s banking sector stands at a pivotal moment. With clarity of purpose, strategic planning, and genuine community engagement, banks can become engines of regional transformation.
This is not just about weathering a crisis. It’s about reimagining the role of banks in shaping an inclusive, resilient, and prosperous Sylhet.
