Dhaka, Bangladesh (BBN) – The central bank of Bangladesh will ask the commercial banks to discourage flow of fresh credit into unproductive sectors aiming to achieve maximum economic growth and curb inflation, officials said.

The instruction will be given during a bankers’ meeting scheduled for Sunday at the central bank Sunday with Bangladesh Bank (BB), the country’s central bank, Governor Salehuddin Ahmed in the chair.

The BB’s move will come against the backdrop of rising credit flow to unproductive sectors, mostly through offering credit cards and consumer financing over the last one year, they added.

The growth in credit for buying goods using credit cards rose significantly by 121.05 per cent in June last over the corresponding period of the previous year while credit for purchasing consumer goods increased by 93.30 per cent, the BB’s data showed.

During the period, marriage loan went up by 60.73 per cent compared with that of the same period of the previous year while flat purchase loan increased by 44.12 per cent.

“The BB will ask the banks to provide loans to the productive sectors from their own deposits rather than borrowing from the money market,” a BB senior official told BBN in the capital, Dhaka.

He also said the banks will have to raise their deposit growth to meet the increasing demand for credit.

Credit growth to the private sector stood at 26.96 per cent as on August 14 last while deposit growth in the country’s banking system reached 17.72 per cent, according to the central bank statistics.

The BB official also said the central bank will advise the banks to gear up loan disbursement in productive sectors, including agriculture for achieving maximum economic growth by the end of this fiscal.

The central bank earlier asked the commercial banks to increase investment in the productive sectors, particularly agriculture, small and medium enterprises (SMEs), construction, infrastructure, and other rural activities, for recouping the losses caused by floods and cyclone.

BBN/SI/SS/AD-17October08-12:53 PM (BST)