Private sector loan growth is nearing 18% after four-and-a-half years
The demand for private loans is on the rise this year, far surpassing the central bank’s target.
Till September this year, the banking sector issued additional loans in the amount of Tk1,22,650 crore over loans issued in the same period last year.
Private sector loan growth is nearing 18% after four-and-a-half years.
According to Bangladesh Bank’s quarterly report on currency and exchange rates, until September this year banks gave out Tk7,97,789 crore in loans, whereas by the end of September 2016 it was Tk6,75,139 crore.
In September 2016 the sector grew by 17.8%, and at the beginning of the current fiscal year loan disbursement growth was 16.94%. Till December 2017 the growth target was set to 16.3%.
The report called the growth positive. It however, raised concerns about inflation, saying inflation may accelerate under the influence of international market prices, natural and man-made disasters.
Surplus foreign exchange is on the decline due to rising import costs, and dollar price hike is likely to benefit exporters, the report said.
In 2009-10 fiscal, private sector loan growth was 24.24%, in 2010-11 it was 25.84%, 19.72% in 2012-13, 10.85% in 2013-14 and 12.27% in the next two fiscal years.
Political instability since 2013 affected the private sector, and it only began recovering from early 2015.
According to the central bank, in the first five months of the fiscal year, LC opening increased 88%, and clearing increased by 20%. The majority of these are capital machinery for government projects, however. Import of raw material, capital machinery and consumer goods in the private sector has also grown.