Unrest In The Run Up To Polls
Pvt sector credit growth slows again in Aug
Credit growth in the private sector plunged again in August as the businesspeople continued to show a reluctant attitude to expanding their business by taking finance from banks due to the ongoing political unrest, said officials of the Bangladesh Bank.
According to the latest BB data, the private sector credit growth stood at 11.33 per cent in August this year compared with that of 19.92 per cent in the corresponding month last year.
The credit flow to the private sector stood at Tk 4,61,379.10 crore in August 2013 while it was Tk 4,14,420.40 crore in the same month of 2012. The figure was Tk 3,45,561.90 crore in August 2011.
In July this year, the private sector credit growth increased slightly after falling in 12 months as the businessmen imported a significant amount of essential commodities in the month eyeing on political situation in the run up to the next general elections, the BB officials said.
The year-on-year credit growth in the private sector was 11.61 per cent in July.
The BB data showed that the import had increased by 12.09 per cent to $3.21 billion in July 2013 against an 8.74-per cent growth in July 2012.
The import declined again in August this year, resulting in a lower private sector credit growth in the month.
The settlement of letters of credit, generally known as actual import, registered a negative growth of 6.03 per cent in August against a 2.28-per cent growth in the corresponding month of 2012.
The import of total products stood $2.33 billion in worth in August this year. It was $2.48 billion in August 2012.
A BB official told New Age on Thursday that the credit growth in the private sector might decline further in the coming months as the businessmen were now maintaining a cautious business policy amid political instability.
The businesspeople think that the political uncertainty will deepen in the months to follow as the country’s two major political alliances are yet to reach any solution over the next polls-time government, he said.
Amid political unrest, the private sector credit growth hit a 13-year low at 11.04 per cent in the last fiscal year 2012-13.
The central bank at a recent bankers’ meeting asked managing directors and chief executive officers of the scheduled banks to increase their credit disbursement to agriculture and small and medium enterprise sectors in a bid to boost the private sector credit growth, the BB official said.
The BB’s effort, however, failed as the businessmen are now little interested to take loans from the banks for business expansion due to the ongoing political unrest, he said.
Besides, the latest monetary policy for July-December of 2013 might also discourage the businesspeople as the BB set a lower credit growth in the private sector, he said.
In its latest monetary policy, the BB cut the target of credit growth in the private sector to 15.5 per cent by December 2013 and 16.5 per cent by June 2014 from that of 18.3 per cent in December 2012 and 18.5 per cent in June 2013.
Under the circumstances, the credit growth in the private sector may decline further in the coming months, the BB official added.
The BB data showed that the credit growth in the overall domestic sector slumped to 12.31 per cent in August this year compared with that of 19.01 per cent in the corresponding month of 2012.
The total credit in the domestic sector in August stood at Tk 5,91,051.90 crore against Tk 5,26,281.90 crore in the same month of 2012.
-With New Age input
