To focus on financial inclusion programme amid dull business
Bangladesh Bank may keep unchanged the private sector credit growth target in the upcoming monetary policy for January-June of 2015 considering the existing lower credit demand from the private sector amid political unrest and uncertainty, said officials of the central bank.
Under the monetary programme for financial year 2014-15, the central bank had set a 14 per cent credit growth target for the private sector by December 2014 and 15.50 per cent by June 2015.
A BB official told New Age on Thursday that it would be a tough job for the financial sector to achieve the targeted private sector credit growth of 15.50 per cent by June of the FY15 as the credit demand from the private sector was now highly sluggish due to recent fresh spat of political violence.
Against the backdrop, the central bank will focus on speeding up the credit flow by expanding its financial inclusion programme, he said.
Under the financial inclusion programme, the central bank will ask the banks to disburse more credit to the farm and SME sectors, the official said.
The BB is likely to announce the new monetary policy in the last week of this month, he said.
The official said the private sector credit growth target set at the monetary policy for July-December of 2014 was unlikely to be achieved as the year-on-year private sector credit growth had posted a 12.67 per cent growth in November against the target of 14 per cent at the end of December.
The private sector credit growth target is unlikely to be achieved as the businesspeople are still maintaining a ‘wait and see’ approach due to political unrest and uncertainty, he said.
The BB official said the credit growth in the private sector was likely to decline more in the coming months as the country was now facing a fresh blockade since the beginning of this year.
There is no much possibility of improvement of the existing business situation in the coming months as the country’s two major political alliances are yet to reach a compromising level about the political aspects, he said.
When asked whether the BB would decline the target of the private sector credit growth in the second half of the FY15 considering the lower market demand, the official said the central bank would keep the target almost unchanged as it would face huge criticism from the different corner if it made such type of decision.
The BB earlier set a number of contractionary monetary policies in the last few years in line with the International Monetary Fund’s condition.
But, the situation has changed much as the credit demand has declined drastically due to the existing political uncertainty, the official said.
The BB is now facing a tough situation to make the decision about the upcoming monetary policy as there will create a speculative situation in the private sector if it injects excess liquidity in the market, he said.
The BB will try best to inject optimum finance into the productive sector to ensure a satisfactory GDP growth for the FY14, the official said.
Under the upcoming monetary policy, the BB will open the window to disburse available good-quality loan, but well-reputed investors are now highly reluctant to take the loan from the banks, he said.
For this reason, the central bank will focus on expanding its financial inclusion programme by disbursing loan to the marginal investors, the official said.
Such type of programme will boost up small entrepreneurs and that will ultimately put a positive impact on the GDP growth, he said.
-With New Age input
