The growth rate climbed to 16.2% in August from 16% in July. It was the highest 16.8% in June, above the monetary target of 16.7% set for September.
The total credit to private sector stood at Tk6,71,900 crore in August.
The upward trend of private sector credit growth is still not a concern for Bangladesh Bank as Advance Deposit Ratio (ADR) is far lower than the authorised limit, said Allah Malik Kazemi, change management adviser to the central bank.
The average ADR in the banking sector was 70.81% as of July, far below the regulatory limit of 80%, according to the Bangladesh Bank data.
The BB official expressed concern about the rising consumer financing, saying that loan growth is not so qualitative.
On the other hand, bankers are very happy about the growing credit demand.
Expressing satisfaction on the existing credit trend, Golam Hafiz Ahmed, managing director of NCC Bank, said the credit demand is rising as the government’s mega project in infrastructure sector is being implemented.
He said the lion’s share of credit went to infrastructure mostly in power projects. The downtrend in lending rates also contributed to the higher credit growth.
The NCC bank official noted that good borrowers are getting loans at a single digit interest rate while a very few loans are being offered at between 10% and 11%.
Only SME loans are being offered at higher rate, he added.
Hafiz said large borrowers are now mostly interested to take loans from domestic sources instead of foreign sources due to lower
lending rates pushing the credit demand up.
On the other hand, banks are very interested to lend the private sector as the government is not borrowing while the call money market is dull for business.
Lending rate in the banking sector continued to fall in August reaching 10.24% compared to 11.51% in the same period last year. The lending rate was 10.32% in July this year.
Domestic credit growth rose to 13.1% in August against the monetary ceiling of 14.4% set for September.