Economic Reporter :
The private sector credit growth dropped to 10.66 percent, the lowest after September 2010, when it was 6.09 percent according to the Bangladesh Bank data
Private sector credit growth sank to a nine-year low in September this fiscal year, which experts blame on slow deposit growth leading to liquidity crisis, high government borrowing, cautious lending and slow import growth.
In the month, the private sector credit growth dropped to 10.66 per cent the lowest after September 2010, when it was 6.09 percent according to the Bangladesh Bank data.
In the first three months (July-September) of this fiscal year, the growth remained far below the central bank’s curtailed estimation, 14.8 per cent for the current fiscal year.
Most of the banks were lending cautiously because they were now under pressure to adjust the advance-deposit ratio (ADR) by September 30 as per the central bank’s instruction, said Pubali Bank Managing Director MA Halim Chowdhury.
In August this year, the private sector credit growth was at 10.68 per cent , which was 11.26 percent in July, 11.29 per cent in June, 12.16 per cent in May, 12.07 per cent in April, 12.42 per cent in March, 12.54 per cent in February and 13.20 per cent in January this year.
Policy Research Institute executive director and BRAC Bank Chairman Ahsan H Mansur blamed two factors for slowed private sector credit growth.
The first one is liquidity crisis in banks due to a slow deposits growth while the second is increased government borrowing from bank to meet budget deficit.
High amount of non-performing loans was another reason for the slump in private sector credit growth, he said.
The government borrowed nearly Tk280 billion from the country’s banking system in more than 100 days of the current fiscal year to meet the budget deficit, partially.
Of the total, the government borrowed Tk256.88 billion from the scheduled banks using treasury bills (T-bills) and bonds, and the remaining Tk19.46 billion from the central bank, according to the central bank data.
