Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has asked the commercial banks not to exceed the consumer credit growth more than its total average growth of loan portfolios, officials said.
“The central bank has taken the latest measure aiming to achieve a sustainable economic growth through increasing credit flow to the productive sectors by slashing loans from unproductive sectors including consumer financing,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The central bank issued a circular in this connection on the day and asked the chief executives of all scheduled banks to follow the latest instruction relating to increasing credit flow to the productive sectors.
The central bankers also said the BB wants to increase credit flow to the productive sectors for facilitating the country’s overall economic activities.
The BB’s latest measure came against the backdrop of the rising trend of consumer loans despite repeated attempts by the regulator to discourage loans for the same.
“The average credit growth of the banking sector was 15 percent in 2011 while the growth of consumer loans was 19 percent,” the BB official said as he mentioned the rising trend of the consumer financing by the banks.
Earlier on January 22 this year, the central bank asked the commercial banks to discourage credits to certain sectors including consumer financing.
It brought about certain changes in the margin ratios of various loans to discourage lending to ‘unproductive’ sectors.
Currently, the banks are maintaining a 70:30 loan margin ratio, instead of the existing 80:20 earlier, in the housing finance. The ratio for the car loans and all other consumer financing is 30:70 instead of the existing 50:50.
“The central bank has taken the measures aiming to curb inflationary pressure on the economy through discouraging credit flow to the less productive sectors,” another BB official said.
BBN/SSR/AD-25Apr12-9:31 am (BST)