Pvt sector’s credit appetite dips in Jan

The country’s private sector credit growth decreased in January from that of December as the businesspeople maintained a go-slow investment policy due to the ongoing political violence.

According to Bangladesh Bank data released on Wednesday, the year-on-year credit growth rate in the private sector decreased to 13.33 per cent in January compared with that of 13.50 per cent in December 2014, reports the New Age.

Workers on the floor of a garment factory in BangladeshCredit flow to the private sector stood at Tk 5,41,881.90 crore as of January 2015 against Tk 4,78,128.70 crore as of January 2014. It was Tk 5,43,407.20 crore as of December 2014 against Tk 4,78,766.60 crore as of December 2013, the BB data showed.

A BB official told New Age on Thursday that the year-on-year credit growth in the private sector had increased slightly in the first half of the FY15 but the growth failed to keep the momentum at the first month of 2015 due to the ongoing political unrest.

The private sector credit growth stood at 12.67 per cent in November, 12.12 per cent in October, 12.15 per cent in September, 11.39 per cent in August and 11.25 per cent in July of this financial year.

Despite the increasing trend, the central bank had failed to achieve its private sector credit growth target of 14 per cent in line with its money policy for July-December 2014 due to the political uncertainty in the period, he said.

Due to the ongoing crisis, the central bank kept unchanged the private sector credit growth of 15.50 per cent in the second half of the FY15 in its latest monetary policy statement, the official said.

He feared that the central bank would fail again to achieve its target for the second half of the FY15 if the ongoing political crisis persisted.

The country’s private sector credit growth maintained a sluggish trend in the last two and half years due to an absence of vibrant business environment amid political unrest and uncertainty, the official said.

The credit growth in the private sector had hit a 13-year low of 10.85 per cent in the FY13 due to political instability, higher interest rate on lending and bank scams.

The lower credit growth in the private sector has already 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 for the FY14, much lower than the initial target of 7.2 per cent, the BB official said.

The businesspeople adopted a ‘wait and see’ approach to expand their business in the period, he said.

A good number of businessmen earlier became loan defaulters due to sluggish business amid the political unrest and in this situation it became difficult for them to get more loans from banks, the official said.

The banks also took a cautious policy to disbursing loan in the private sector to avoid classified loans, he said.

‘Ensuring vibrant political environment is highly important to achieve goal in the private sector credit growth,’ the official said.

The BB data showed that the year-on-year credit growth in the overall domestic sector also decreased to 10.82 per cent in January 2015 from 11.18 per cent in previous December 2014.

The total credit in the domestic sector stood at Tk 6,70,990.90 crore as of January 2015 against Tk 6,05,464.10 crore as of January of 2014. It was Tk 6,73,734.60 crore as of December 2015 against Tk 6,05,969.40 crore as of December 2013.


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