The private sector credit growth inched up in September from that of the previous month as the country’s import payment increased significantly in the first quarter of this financial year. According to the latest Bangladesh Bank data released this week, the year-on-year credit growth rate in the private sector rose to 12.15 per cent in September compared with that of 11.39 per cent in August of this year.
The BB earlier set a private sector credit growth target of 14 per cent by December, 2014.
BB officials said the credit growth rate in the private sector slightly increased in September as the country’s import payment rose significantly in the first three months of the FY 2014-15.
The imports registered a 13.62-per cent growth in July-September of the FY15 compared with that of 9.37-per cent growth in the corresponding period of the FY14.
The import payment stood at $10.00 billion in July-September of the FY15 and it was $8.80 billion in the same period of the FY14.
BB officials said that although the credit growth rate rose slightly in September, it still remained below the target of 14 per cent to be achieved by December as per the monetary policy.
Credit flow to the private sector stood at Tk 5,22,399.00 crore in September 2014 against Tk 4,65,789.50 crore in the same month of 2013. It was Tk 5,13,083.32 crore in August 2014 against Tk 4,60,618.70 crore in the same month of 2013.
The private sector credit growth stood at 12.27 per cent in the last financial year, much lower than the BB-set target of 16.50 per cent as the businesspeople were reluctant to expand their business due to the political violence in the period, a BB official said.
The private sector credit growth also hit a 14-and-a-half-year low at 10.60 per cent in December of 2013. The growth was 16.61 per cent in the same month of 2012.
For this reason, the central bank has taken a lower private sector credit growth of 14.50 per cent for the FY15 against 16.50 per cent for the FY14, the BB official said.
The violent political conflicts in the first half of the FY14 over the process of holding general elections hit the private sector, he said.
In the situation, the businesspeople had adopted a ‘wait and see’ approach to expansion of their business in the period, he said.
He said that the country was still facing dull business situation due to the ongoing political uncertainty as the opposite political parties had not recognised the general elections held on January 5 this year.
The BB data showed that the year-on-year credit growth in the overall domestic sector slightly increased to 12.27 per cent in September against 11.36 per cent in August of this year.
The total credit in the domestic sector in September stood at Tk 6,58,218.60 crore in September in 2014 against Tk 5,87,048.40 crore in the same month of 2013. It was Tk 6,47,225 crore in August of this year against Tk 5,81,205.90 crore in the same month of 2013.
The BB official, however, said that the credit growth rate in the domestic sector was yet to reach in a desirable
level due to a slower pace in implementation of the annual development programme.
He said that the government had significantly declined its borrowing from the banking sector in the recent months that also played a role in curbing the overall credit growth in the domestic sector in September.
-With New Age input
