The advance-deposit ratio in the country’s banking sector fell below 70 per cent in the last week of August due to a dull business situation amid political uncertainty, said Bangladesh Bank officials. All banks’ ADR came down to 69.91 per cent as of August 28, 2014 from 70.42 per cent as of July 24, 2014. It was 70.84 per cent as of January 30, 2014, 74.01 per cent as of June 13, 2013, 76.59 per cent as of December 31, 2012 and 80.33 per cent as of June 7, 2012.
A BB official told New Age on Thursday that most of the entrepreneurs still maintained a ‘go-slow policy’ for setting up new industries or expansion of their business operations due mainly to the political unrest in the run up to the January 5 national polls that hit the ADR adversely in the banking sector.
‘We earlier hoped that the country’s business situation would get tempo in the second half of financial year 2014-15. But, the business sector is yet to get the momentum due to lack of confidence,’ he said.
The ADR, one of the most important business indicators for the banks, has been hovering at the range of 70 per cent since December 2013.
But, the ADR declined below 70 per cent in the last week of August meaning that the business situation worsened more in the period, the BB official said.
The BB data showed that the ADR declined in almost every month since the second half of the financial year 2013-14, he said.
A significant number of banks faced losses in the last year and they will suffer same situation if they see dull ADR also in the months to come, he said.
As per BB rules, the conventional commercial banks are not allowed to invest more than 85 per cent of their deposits while Islamic banks and Islamic wings of the conventional commercial banks can invest up to 90 per cent of their deposits.
A number of banks had crossed the ADR limit in 2011 and 2012, violating the BB rules but the situation changed completely last year as the credit demand from the private sector continued to decrease, the BB official said.
Core business of banks witnessed a stagnated situation in the recent months due to lower credit growth, particularly in the private sector, he said.
The overall growth in credits from the country’s banking sector came down to 11.08 per cent as of August 28, 2014 from 11.74 per cent as of July 24, 2014 while the deposit growth fell to 14.48 per cent from 16.13 per cent.
All banks’ deposit balance rose to Tk 6,72,149.73 crore as of August 28 last from Tk 6,65,544 crore as of July 24, 2014 while outstanding loan stood at Tk 4,90,629 crore from Tk 4,89,654 crore, the BB data showed.
-With New Age input
