Dhaka, Bangladesh (BBN) – The central bank of Bangladesh is scrutinising the flow of private sector credit for assessing its impact in the country’s overall economic growth.
The Bangladesh Bank (BB), the country’s central bank, is now conducting a study in this connection to achieve maximum economic growth through proper use of credit.
“We want to facilitate real sectors through ensuing adequate credit flow for achieving optimum GDP growth by the end of the upcoming fiscal year,” a BB senior official told BBN in Dhaka while explaining the main objective of the study.
He also said the private sector credit growth target may be fixed for the next monetary policy in line with the study’s recommendations.
The most part of the total ‘outstanding’ loans until March 2016 went to consumers financing, readymade garment (RMG) and other commercial activities, according to initial findings of the study.
The total ‘outstanding’ consumer loans grew by nearly 15 per cent to BDT 218 billion as on March 31 last from BDT 190 billion in the same period of the previous calendar year while the ‘outstanding’ loans of RMG sector increased by more than 15 per cent to BDT 801 billion from BDT 696 billion during the same period.
The total ‘outstanding’ loans for commercial purposes rose by nearly 23 per cent to BDT 1090 billion over a period of one year from BDT 887 billion in March 2015, the BB data showed.
The total ‘outstanding’ loans with the private sector rose to BDT 6364.42 billion in March 2016 from BDT 5526.69 billion in the same month of 2015.
The central bank took the latest move after exceeding the private sector credit growth target set by it in its monetary policy, for the January-June period of the ongoing fiscal year.
The central bank had projected that the private sector credit would grow at 14.8 per cent in June 2016 from 13.8 per cent in December 2015.
The private sector credit growth has already reached at 15.59 per cent in April last on a year-on-year basis from 15.16 per cent in March, 2016. The credit growth was 15.11 per cent in February.
Earlier on May 31 last, the central bank asked chief executive officers and managing directors of all scheduled banks at a bankers meeting to ensure the quality of credit for helping lessen the amount of non-performing loans (NPLs) in the country’s banking sector.