Pvt sector credit growth increases slightly in Feb

0420

The country’s private sector credit growth increased slightly in February from that of January this year as the businesspeople, who had applied for loans from banks earlier, received the loans in the month.
According to the Bangladesh Bank data released last week, the year-on-year credit growth rate in the private sector increased to 13.61 per cent in February compared with that of 13.33 per cent in January 2015.
Credit flow to the private sector stood at Tk 5,45,534.50 crore as of February 2015 against Tk 4,80,176.40 crore as of February 2014. It was Tk 5,41,881.90 crore as of January 2015 against Tk 4,78,128.70 crore as of January 2014, the BB data showed.
A BB official told New Age on Thursday that the increase in the private sector credit growth in February was a temporary phenomenon and it would not continue in the coming months if the existing political crisis prevails.
The businesspeople earlier had taken a plan to expand their business before January 2015 considering an eased political situation in the period, he said.
But, the BNP-led 20-party alliance has been calling non-stop blockade supplemented by frequent hartals since early January.
Against the backdrop, the businessmen have again adopted a go-slow policy to expansion of their industrial units that ultimately put an adverse impact on the country’s private sector, the official said.
The private sector credit growth stood at 13.50 per cent in December, 12.67 per cent in November, 12.12 per cent in October, 12.15 per cent in September, 11.39 per cent in August and 11.25 per cent in July of this financial year.
Due to the political uncertainty, the central bank failed to achieve its private sector credit growth target of 14 per cent in line with its monetary policy for the July-December period of 2014.
The central bank kept unchanged the private sector credit growth of 15.50 per cent in the second half of the FY15 in its latest monetary policy statement due to the recent spate of political violence, official said.
He feared that the central bank would fail again to achieve its target for the second half of the FY15 if the ongoing political crisis persists.
The country’s private sector credit growth maintained a sluggish trend in the last two and half years due to an absence of vibrant business environment amid political unrest and uncertainty, the official said.
The credit growth in the private sector had hit a 13-year low of 10.85 per cent in the FY13 due to political instability, higher interest rate on lending and bank scams.
The lower credit growth in the private sector has already put an adverse impact on the GDP target for the FY14 as Bangladesh Bureau of Statistics projected that the country’s GDP growth was 6.12 per cent for the FY14, much lower than the initial target of 7.2 per cent, the BB official said.
A good number of businessmen earlier became loan defaulters due to sluggish business amid the political unrest and in this situation it became difficult for them to get more loans from banks, the official said.
‘Ensuring vibrant political environment is highly important to achieve goal in the private sector credit growth,’ the official said.
The BB data, however, showed that the year-on-year credit growth in the overall domestic sector decreased to 10.64 per cent in February 2015 from 10.82 per cent in January.
The total credit in the domestic sector stood at Tk 6,73,576.30 crore as of February 2015 against Tk 6,08,809.30 crore as of February of 2014. It was Tk 6,70,990.90 crore as of January 2015 against Tk 6,05,464.10 crore as of January 2014.
Source: New Age

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