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Bangladesh - 2 weeks ago

Credit flow to pvt sector increased

Bangladesh Bank Info

Staff Correspondent: Private credit growth was achieved for the second time in line with the monetary policy target in May. It rose 0.45 basis points to 10.35 percent from the previous month. The growth rate of this loan was 14 per cent in the first half of the financial year 2023-24 but was brought down to 10 per cent in the second half. Since then, growth has been around the target.
Bankers say this growth is due to contractionary monetary policy and rising lending rates. Increasing private sector investment is essential for the development and employment growth of a country. But gradually the private investment of our country is decreasing.
According to the data of Bangladesh Bank, the credit growth in the private sector was 9.90 percent in April this year. Credit growth in this sector was 10.49 percent in March, which was the highest in 9 months at that time.
Shaukat Ali Khan, Managing Director of Bangladesh Krishi Bank, said that due to the slow pace of the country’s economy and the international market, businessmen are reducing new business expansion. Apart from this, the loan interest has increased to more than 14 percent. Due to which the businessmen take into account the interest rate while taking loans. Apart from this, the price of dollar is continuously increasing. Due to the increase in the price of the dollar, traders are making various calculations in importing. Due to which the growth is not increasing much.
Shaukat Ali Khan said that imports have decreased drastically in the last two years due to the imposition of margin on LCs by the Central Bank. Now every month LCs are opened for about $5 billion. However, in FY2021-22, LCs were opened at around $8 billion per month. Because of that, the growth of private sector credit has come down a lot.
According to the data of Bangladesh Bank, in the first eight months of the current fiscal year (July-February), the amount of LC opening and settlement has decreased by 4.23 percent and 13.93 percent respectively compared to the same period of the previous fiscal year. In the first eight months of the financial year 2022-23, LC settlement was $51.48 billion. In the first eight months of the current financial year, LC settlements were worth $44.31 billion.
In the first eight months of the current financial year, LC settlement of capital equipment fell by 25.36 percent to $1.85 billion. Apart from this, the import settlement of industrial raw materials decreased by 25.06 percent to $1.43 billion.

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