Business Desk :
Private sector credit grew sharply after two years on an increasing demand despite uncertainties accompanying the latest wave of Covid-19 pandemic.
The year-on-year private sector credit growth reached 10.68 per cent in December last year, up from 10.11 per cent in November of that year, Bangladesh Bank data show.
Credit growth in September 2019 stood at 10.70 per cent.
Dhaka Bank’s Managing Director and CEO Emranul Huq said that the credit growth has increased due to three reasons.Import financing is one of the reasons, he said, adding that the country’s import payment rose sharply after the second wave of the pandemic, which affected credit growth.
“Another reason was high credit demand after the second wave of the pandemic,” he said. “And the third reason is that most of the banks disbursed loans in December to meet their target as this was the last month.” Huq said that the credit growth may fall in January as the third wave of the pandemic had already hit the country.
The credit growth of December is 4.12 percentage points lower than the Bangladesh Bank’s target for the current fiscal year. The central bank kept the private sector credit growth target unchanged at 14.8 per cent for FY2021-22.
An increasing credit demand trend pushed up the banks’ lending rate slightly in December last year. The weighted average lending rate of banks stood at 7.18 per cent in December last year, up from 7.15 per cent a month ago, BB data show. The lenders refrained from disbursing credit during the countrywide shutdown from March 26 to May 30, 2020, which dropped the credit growth to 8.6 per cent in June that year. The credit growth then hovered around 8 per cent for the next several months. The banking sector’s surplus liquidity increased sharply in 2020 due to the slow credit demand.
