Pvt sector credit growth rises after 12 months
BB officials see rise temporaryAKM Zamir Uddin
Credit growth in the private sector increased slightly in July, the first month of the current fiscal year, after 12 months due to a higher import of food products in the period, said officials of the Bangladesh Bank.
According to the latest BB data, credit growth in the private sector increased by 11.61 per cent in July compared with that of 20.26 per cent in the corresponding month of 2012.
The year-on-year credit growth was 11.04 per cent in June, 11.43 per cent in May, 12.68 per cent in April, 12.72 per cent in March, 13.96 per cent in February, 14.83 per cent in January, 16.55 per cent in December, 17.41 per cent in November, 18.38 per cent in October, 19.88 per cent in September, 19.93 per cent in August, 20.26 per cent in July, and 19.72 per cent in June, 2012.
A BB official told New Age on Thursday that the increased credit growth in July was a temporary phenomenon as the business people had imported a large amount of food products in the period considering the political unrest ahead of the national election.
The BB data showed that the import increased by 12.09 per cent to $3.21 billion in July compared with that of an 8.74 per cent growth in the corresponding month of 2012.
He said that the import had increased in August due to a rise in import of food products as business people had moved to build stocks of essential commodities considering political unrest in the coming months ahead of the next general election.
The official said that the import had declined again in August which would put an adverse impact on the private sector credit growth in the month.
The settlement of letters of credit, generally known as actual import, registered a negative growth of 6.03 per cent in August compared with that of a 2.28 per cent growth in the corresponding month of 2012.
The import of total products stood worth $2.33 billion in August this year. It was $2.48 billion in August 2012.
‘For these reasons, the increased credit growth in July was a temporary phenomenon. But the credit growth may increase in the month to come if the loan disbursement in the industry and agriculture sectors increase,’ he said.
The credit flow to the private sector stood at Tk 4,57,232.60 crore in July of 2013 against Tk 4,09,662.30 crore in the same month of 2012. It was Tk 3,40,637.60 crore in July 2011.
The credit growth in private sector hit a 13-year low of 11.04 per cent in the recently concluded fiscal year 2012-13 due to political instability, higher interest rate on lending and bank scams, said another BB official.
He said that the business people had recently adopted a ‘wait and see’ approach to invest further in productive sectors due to the ongoing political violence.
Under the circumstances, the credit growth in the private sector consecutively declined in every months of the FY 13, he said.
Besides, the latest monetary policy for July-December of 2013 may also discouraged the business sector as the BB set a lower credit growth in the private sector than the previous credit growth set by the central bank, he said.
In its latest monetary policy, the BB cut the credit growth in the private sector to 15.5 per cent by December 2013 and 16.5 per cent by June 2014 from that of 18.3 per cent in December 2012 and 18.5 per cent in June 2013.
Under the circumstances, the credit growth in the private sector may decline in the coming months, he said.
The BB data showed that credit growth in the overall domestic sector slumped to 13.71 per cent in August compared with that of 17.88 per cent in the corresponding month of 2012.
The total credit in the domestic sector in August stood at Tk 5,92,786 crore against Tk 5,21,300.10 crore in the same month of 2012.
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