Abu Sazzad :
The credit expansion to the private sector in the country has declined further due to lower trade financing by the commercial banks as well as the ongoing sluggish investment situation, said economists.
The central bank has set a ceiling for the private-sector credit growth at 14.30 per cent for the first half of the current fiscal 2015-16 (July-December), as per the latest monetary policy statement (MPS).
According to the latest Bangladesh Bank data, the year-on-year credit growth rate in the private sector rose to 12.88 per cent in September compared with that of 12.69 per cent in August of this year. The private sector credit growth was 12.96 per cent in July.
The private sector credit growth had stood at 13.19 per cent in the FY15 against the central bank’s target of 15.50 per cent.
Credit flow to the private sector stood at Tk 589,685.60 crore in September 2015 against Tk 522,399 crore in the same month of 2014. It was Tk 578,176.90 crore in August 2015 against Tk 513,083.10 crore in August 2014.
Actually, the business people suffer in doing business because of inadequate gas and electricity connection. Political unrest and uncertainty are another reason of short of target.
According to the economists, the country’s ideal credit growth is between 17 per cent and 18 per cent. But, it is not possible to achieve the growth right now due to the ongoing sluggish investment situation.
They said that the large borrowers were now facing crisis and that was another reason for the lower private sector credit growth. Some of the large borrowers are now overburdened with debt while a significant number of them have already become loan defaulters.
The private sector credit growth would face hurdle in the coming months if the existing gas and electricity problem prevails. Moreover, a good number of businessmen earlier became loan defaulters because of the sluggish business amid the political unrest and eventually it became difficult for them to get more loans from banks.
“Ensuring vibrant political environment is highly important to achieve goal in the private sector credit growth,” said Economist Mamunur Rashid.
The commercial banks had recently cut their interest rates on lending but they failed to attract the businesspeople to take loans. The situation indicates that the country’s existing business environment is unfriendly for expanding business, he said.
The ongoing political uncertainty and deterioration in law and order situation were the key causes of the lower private sector credit growth, he pointed out.
‘The businesspeople think that they would default on loans if they take fresh credit from banks now amid sluggish business situation,’ he said.
CPD Executive Director Mustafizur Rahman said that the rise in private sector credit growth in September was insignificant and it had been maintaining a stagnant situation for long.
The businesspeople are now facing shortage of electricity and gas to expand their business that will ultimately hit the private sector credit growth, he said.
Most of the businesspeople are not able to open new enterprises and they are just conducting their existing business due to the shortage of power connection, he said.
Actually, the central bank failed to achieve the private sector credit growth targets in recent financial years due to the political unrest and uncertainty, he claimed.
The credit expansion to the private sector in the country has declined further due to lower trade financing by the commercial banks as well as the ongoing sluggish investment situation, said economists.
The central bank has set a ceiling for the private-sector credit growth at 14.30 per cent for the first half of the current fiscal 2015-16 (July-December), as per the latest monetary policy statement (MPS).
According to the latest Bangladesh Bank data, the year-on-year credit growth rate in the private sector rose to 12.88 per cent in September compared with that of 12.69 per cent in August of this year. The private sector credit growth was 12.96 per cent in July.
The private sector credit growth had stood at 13.19 per cent in the FY15 against the central bank’s target of 15.50 per cent.
Credit flow to the private sector stood at Tk 589,685.60 crore in September 2015 against Tk 522,399 crore in the same month of 2014. It was Tk 578,176.90 crore in August 2015 against Tk 513,083.10 crore in August 2014.
Actually, the business people suffer in doing business because of inadequate gas and electricity connection. Political unrest and uncertainty are another reason of short of target.
According to the economists, the country’s ideal credit growth is between 17 per cent and 18 per cent. But, it is not possible to achieve the growth right now due to the ongoing sluggish investment situation.
They said that the large borrowers were now facing crisis and that was another reason for the lower private sector credit growth. Some of the large borrowers are now overburdened with debt while a significant number of them have already become loan defaulters.
The private sector credit growth would face hurdle in the coming months if the existing gas and electricity problem prevails. Moreover, a good number of businessmen earlier became loan defaulters because of the sluggish business amid the political unrest and eventually it became difficult for them to get more loans from banks.
“Ensuring vibrant political environment is highly important to achieve goal in the private sector credit growth,” said Economist Mamunur Rashid.
The commercial banks had recently cut their interest rates on lending but they failed to attract the businesspeople to take loans. The situation indicates that the country’s existing business environment is unfriendly for expanding business, he said.
The ongoing political uncertainty and deterioration in law and order situation were the key causes of the lower private sector credit growth, he pointed out.
‘The businesspeople think that they would default on loans if they take fresh credit from banks now amid sluggish business situation,’ he said.
CPD Executive Director Mustafizur Rahman said that the rise in private sector credit growth in September was insignificant and it had been maintaining a stagnant situation for long.
The businesspeople are now facing shortage of electricity and gas to expand their business that will ultimately hit the private sector credit growth, he said.
Most of the businesspeople are not able to open new enterprises and they are just conducting their existing business due to the shortage of power connection, he said.
Actually, the central bank failed to achieve the private sector credit growth targets in recent financial years due to the political unrest and uncertainty, he claimed.
