Transactions in a state-owned bank is going on at Motijheel, the commercial hub of Bangladesh. BBN file photo
Dhaka, Bangladesh (BBN) - Bangladesh’s private sector credit growth increased significantly in the just-concluded fiscal year (FY) mainly due to higher import payment obligations, bankers said.
The growth in credit flow to private sector rose to 16.95 per cent in the FY 2017-18 from 15.66 per cent a year before, according to the central bank latest statistics.
It was 16.78 per cent in FY 16.
The overall private sector credit growth increased in the FY 18 despite a declining trend in recent months, they added.
The Bangladesh Bank (BB) in its outgoing monetary policy had set a target for the private sector credit growth at 16.80 per cent at the end of June, 2018.
Senior bankers, however, said the private sector credit growth normally increases slightly in June each year because of charging quarterly interest on loans and advances.
Besides, higher import expenses have pushed the overall private sector credit growth in the FY 18, they explained.
Bangladesh's overall imports grew by nearly 17 per cent in the first 11 months of the FY 18 mainly due to higher import of food grains and fuel oils.
The settlement of letters of credit (LCs), in terms of value, rose to US$47.79 billion during the July-May period in the FY 18 from nearly $41 billion during the same period in the FY 17.
“Higher import payments particularly for trade financing have contributed to exceeding the private credit growth target, set by the BB earlier,” a senior executive of a private bank told the BBN in Dhaka.
He also said the ongoing trend in private sector credit growth may continue this month.
The total outstanding loans with the private sector rose to BDT 9076.22 billion in June from BDT 8924.03 billion in May 2018. It was BDT 7760.56 billion in June 2017.
BBN/SSR/AD