Kazi Zahidul Hasan :
The private sector credit growth during the last fiscal has failed to take off in line with the central bank’s target amid sluggish investment demand resulted from political uncertainty along with infrastructure bottleneck, officials said.
They said the growth of such credit remained stagnant for the last three years, affecting recovery of the national economy and a higher GDP growth.
Private sector credit growth stood at 13.19 per cent in the financial year (2014-15) against the central bank’s official target of 15.5 per cent, according to an official data of Bangladesh Bank (BB).
“Private sector credit growth fell 2.31 percentage points short of BB’s target last financial year due to poor investment demands from the investors as a result of political unrest, infrastructure bottleneck and gas and power crisis,” a senior BB official told The New Nation on Friday.
He pointed out that political unrest time and again left a negative impact on the demand for private sector credit which remained sluggish for the last couple of years.
“Private entrepreneurs have adopted a ‘wait and see’ policy to expand their business resulting in sluggish growth in private sector credit. Banks also took a cautious policy in disbursing loan to the
private sector as another reason that is hindering free flow of such credit,” he noted.
The BB official further said that a congenial political and business environment is a must to achieve the private sector credit growth. But the country fails to ensure such an environment affecting the credit growth. “If such a situation continues further, the central bank may again miss the private sector credit growth target set for the first half of the current fiscal,” he added.
“Credit expansion to the private sector has become a big challenge for the government policymakers as private entrepreneurs were reluctant to take venture capital from banks due to political uncertainty and lack of a congenial business environment,” Dr Mustafizur Rahman, Executive Director of Center for Policy Dialogue (CPD) told The New Nation on Friday.
He said low private investment hinders economy from attaining a higher growth of about 8.0 per cent which is often said to be a primary requirement for turning into a middle income country.
While the economy has been growing at the rate of 6.0 per cent for the last few years, low private investment seems to pulling back the economy from attaining a higher growth, he mentioned.
When asked, he said, the situation may not change immediately unless a congenial political and business environment is restored in the country along with much needed reforms in various areas of trade and investment.
“Private sector credit growth has remained low from that of the central bank’s monetary policy target as investment inertia has created among the businessmen due to unfavorable business climate prevailing in the country,” said Dr Zaid Bakht, Research Director of Bangladeshi Institute of Development Studies (BIDS).
The investors are showing much apathy in taking bank loans to expand their business on account of poor infrastructure and fresh flare up in political unrest, resulting sluggish growth in private sector credit, he said.
Zaid Bakht, who is also chairman of Agrani Bank, further added that the credit expansion to the private sector remained low throughout the last fiscal. A similar situation is also prevailing in the current year posing a threat to economic growth.
“Poor infrastructure and unfavorable business climate is mainly responsible for the disappointing credit growth in the private sector,” said Dr AB Mirza Azizul Islam, former finance adviser of the caretaker government.
“Stability in the country’s political arena is in sight and it may help increase the banks’ credit to the private sector,” he added.
The private sector credit growth during the last fiscal has failed to take off in line with the central bank’s target amid sluggish investment demand resulted from political uncertainty along with infrastructure bottleneck, officials said.
They said the growth of such credit remained stagnant for the last three years, affecting recovery of the national economy and a higher GDP growth.
Private sector credit growth stood at 13.19 per cent in the financial year (2014-15) against the central bank’s official target of 15.5 per cent, according to an official data of Bangladesh Bank (BB).
“Private sector credit growth fell 2.31 percentage points short of BB’s target last financial year due to poor investment demands from the investors as a result of political unrest, infrastructure bottleneck and gas and power crisis,” a senior BB official told The New Nation on Friday.
He pointed out that political unrest time and again left a negative impact on the demand for private sector credit which remained sluggish for the last couple of years.
“Private entrepreneurs have adopted a ‘wait and see’ policy to expand their business resulting in sluggish growth in private sector credit. Banks also took a cautious policy in disbursing loan to the
private sector as another reason that is hindering free flow of such credit,” he noted.
The BB official further said that a congenial political and business environment is a must to achieve the private sector credit growth. But the country fails to ensure such an environment affecting the credit growth. “If such a situation continues further, the central bank may again miss the private sector credit growth target set for the first half of the current fiscal,” he added.
“Credit expansion to the private sector has become a big challenge for the government policymakers as private entrepreneurs were reluctant to take venture capital from banks due to political uncertainty and lack of a congenial business environment,” Dr Mustafizur Rahman, Executive Director of Center for Policy Dialogue (CPD) told The New Nation on Friday.
He said low private investment hinders economy from attaining a higher growth of about 8.0 per cent which is often said to be a primary requirement for turning into a middle income country.
While the economy has been growing at the rate of 6.0 per cent for the last few years, low private investment seems to pulling back the economy from attaining a higher growth, he mentioned.
When asked, he said, the situation may not change immediately unless a congenial political and business environment is restored in the country along with much needed reforms in various areas of trade and investment.
“Private sector credit growth has remained low from that of the central bank’s monetary policy target as investment inertia has created among the businessmen due to unfavorable business climate prevailing in the country,” said Dr Zaid Bakht, Research Director of Bangladeshi Institute of Development Studies (BIDS).
The investors are showing much apathy in taking bank loans to expand their business on account of poor infrastructure and fresh flare up in political unrest, resulting sluggish growth in private sector credit, he said.
Zaid Bakht, who is also chairman of Agrani Bank, further added that the credit expansion to the private sector remained low throughout the last fiscal. A similar situation is also prevailing in the current year posing a threat to economic growth.
“Poor infrastructure and unfavorable business climate is mainly responsible for the disappointing credit growth in the private sector,” said Dr AB Mirza Azizul Islam, former finance adviser of the caretaker government.
“Stability in the country’s political arena is in sight and it may help increase the banks’ credit to the private sector,” he added.
