• Sunday, Dec 06, 2020
  • Last Update : 02:57 am

Private sector credit grows 11.26% in July

  • Published at 10:29 pm September 2nd, 2019

As of June, the total bad loans accounted for 11.69% of the total disbursed loans

Private sector credit grew by 11.26% to Tk10,02,966 crore in July this year compared to the same month of last year. 

The credit growth falls behind Bangladesh Bank’s credit growth target of 14.80% set for the current 2019-20 fiscal year. 

There was a huge demand for credit in the private sector but private credit growth was not satisfactory owing to uncertainty in the banking sector, said World Bank, Bangladesh former lead economist Zahid Hussain.

He claimed that banks were under pressure to reduce interest rate to single digit while the lenders were unwilling to take the risk of disbursing loans at low interest. 

So that banks adopted a cautious approach in disbursing loans, he noted.

In June this year, the private sector credit growth was 11.29%, which was 12.16% in May, 12.07% in April, 12.42% in March, 12.54% in February and 13.20% in January this year. 

According to BB data, the total outstanding loan in the private sector rose to Tk10,02,966 crore in July this year from Tk9,01,465 crore last year. In the last one year, private sector credit rose by Tk1,01,500 crore. 

Non-performing loans continue to rise in the country’s banking sector and because of this, Bangladesh Bank is keeping an eye on the banks to ensure quality of credit, which could be the reason behind the slowdown, as per a BB high official. 

Non-performing loans (NPLs) of banks rose by a staggering Tk1,551 crore in three months till June this year, taking the amount of stress loan in the banking sector to Tk112,425 crore. 

As of June, the total bad loans accounted for 11.69% of the total disbursed loans, according to the latest Bangladesh Bank (BB) latest data.

Pubali  Bank Managing Director MA Halim Chowdhury said that most of the banks were now under pressure to adjust the loan-deposit ratio as per the central bank’s instruction. 

Banks were now disbursing fresh loans in a cautious manner to maintain the ratio, which ultimately slowed the credit growth, he added.

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