Wednesday, June 19, 2024

Bank credit-deposit ratio declines below 72pc

Sliding Credit Demand Of Businesses
Bank credit-deposit ratio declines below 72pc
The credit- or advance-deposit ratio in the banking sector declined to below 72 per cent in September as credit demand in the private sector continued to drop since the second half of the last fiscal year due to dull business situation in the country amid political unrest, said officials of the Bangladesh Bank. According to the latest BB data, the overall ADR in the banking sector dropped to 71.65 per cent as of September 26 from 73.34 per cent as of August 1, 2013.
The ADR was 76.59 per cent as of December 31, 2012 and 80.33 per cent as of June 7, 2012.
The ADR in the banking sector declined in every month since the second half of the FY 2012-13 as the majority of the businessmen are now reluctant to expand their business by getting credit from banks due to the existing political unrest, a BB official told New Age on Thursday.
The businessmen have adopted a ‘wait and see’ approach in the last few months as they are keeping an eye on the political developments in the run up to the next general elections, he said.
The majority of the banks will fall deep into loss situation in this year like the previous year, if they see dull ADR also in the remaining months of this year, he said.
The BB data showed that the ADR in the banking sector was 76.95 per cent as of January 10, 76.28 per cent as of February 7, 75.28 per cent as of March 14, 75.26 per cent as of April 25, 74.90 per cent as of May 2, 74.01 per cent as of June 13, 73.35 per cent as of July 11, 73.34 per cent as of August 1 and 71.65 per cent as of September 26 of this year.
As per the 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 now the situation has changed totally as the credit demand from the private sector continued to decrease due to the ongoing political unrest, the BB official said.
He said that the banks had also taken a cautious policy on sanctioning fresh loan as the banking industry recently faced a number of scams.
The ADR in the banking sector along with its credit growth will decline further in the coming months if the ongoing political instability continues, he said.
The BB data showed that the ADR in 33 out of 47 banks (excluding nine new banks) went down significantly between December 31, 2012 and September, 2013.
ADR of Sonali Bank dropped to 53.80 per cent in September, 2013 from 64.50 per cent in December, 2013, Janata Bank to 61.22 per cent from 75.23 per cent, Agrani Bank to 61.37 per cent from 73.40 per cent, Pubali Bank to 70.12 per cent from 80.71 per cent, Uttara Bank to 58.67 per cent from 65.47 per cent, National
Bank to 75.10 per cent from 77.81 per cent, Islami Bank Bangladesh to 83.11 per cent from 87.15 per
cent and IFIC Bank to 71.84 per cent from 78.90 per cent.

-With New Age input

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