The country’s private sector credit growth in October lagged behind the monetary policy target due to dull business amid political uncertainty. According to the latest BB data released on Tuesday, the private sector credit growth plunged again after three months in October from that of the previous month. The BB data showed that the year-on-year credit growth in the private sector decreased to 12.12 per cent in October compared with that of 12.15 per cent growth in September of this year.
The year-on-year private sector credit growth was 11.39 per cent in August and 11.25 per cent in July of this year.
A BB official told New Age on Tuesday that it was frustrating that the private sector credit growth had decreased again in October meaning that the country’s business sector was yet to get vibrant after a political setback during the last financial year.
The BB earlier set a private sector credit growth target of 14 per cent for July-December period of this year.
The official said the credit growth rate in the private sector decreased in October despite the significant rising trend in the country’s import payment in the first four months of the current financial year 2014-15.
The imports increased by 11.10 per cent to $12.94 billion in July-October of the FY15 against $11.64 billion in the same period of the FY14, according to the BB data.
The BB official said loan disbursement by the scheduled banks to the industrial and agriculture sector had declined in the recent months which put an adverse impact on the private sector credit growth.
Credit flow to the private sector stood at Tk 5,25,233.30 crore in October 2014 against Tk 4,68,466.50 crore in the same month of 2013. It was Tk 5,22,399 crore in September 2014 against Tk 4,65,789.50 crore in the same month of 2013.
The private sector credit growth stood at 12.27 per cent in the FY14, 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, another 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.
Against the backdrop, 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 lower credit growth in the private sector put an adverse impact on the GDP target for the FY14 as Bangladesh Bureau of Statistics projected that the country’s GDP growth was 6.12 per cent in the FY14, much lower than the initial target of 7.2 per cent, 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.
The businesspeople had adopted a ‘wait and see’ approach to expansion of their business in the period, the official said.
The BB data showed that the year-on-year credit growth in the overall domestic sector also decreased to10.68 per cent in October 2014 against 12.27 per cent in September of this year.
The total credit in the domestic sector in October stood at Tk 6,57,339.20 crore against Tk 5,93,893.10 crore in the same month of 2013. It was Tk 6,58,218.60 crore in September 2014 and Tk 5,86,268.50 crore in September 2013.
The BB official said the credit growth rate in the domestic sector was yet to pick up due to a slower pace in implementation of the annual development programme.
He said the government had significantly declined its borrowing from the banking sector in recent months that also played a role in decreasing the overall credit growth in the domestic sector in October.
-With New Age input
