Dhaka, Bangladesh (BBN)– The credit-deposit ratio (CDR) of all banks that came down again to below 70 per cent in the middle of July following availability of foreign currency loan with lower interest rate, bankers said.

All banks’ CDR came down to 69.79 per cent, as of July 16 last, from 70.34 per cent as of June 30, 2015. It was 69.91 per cent on August 28 last year, according to the central bank statistics.

The Bangladesh Bank (BB), the country’s central bank, earlier set the safe limit of CDR, officially known as advance-deposit ratio (ADR), at 85 per cent for conventional banks and at 90 per cent for Sharia-based Islamic banks.

Talking to BBN, a senior official of a leading private commercial bank said Higher deposit growth than that of credits influenced the country’s overall credit-deposit ratio during the period under review.

All banks’ deposit excluding inter-bank balance rose to BDT 7525.68 billion as of July 16 last from BDT 7525.46 billion as of June 30, 2015.

On the other hand, outstanding loan excluding inter-bank balance came down to BDT 5493.12 billion from BDT 5533.97 billion, the BB data showed.

“It’s a temporary phenomenon. We expect that the demand for credit would be picked up gradually if the falling trend of interest rates on lending, particularly for corporate entities, continues,” a BB senior official told BBN in Dhaka.

The overall amount of loans had increased in June last due to charging interest on the loan accounts. But the amount of loan decreased in July after realising the interest, the central banker explained.
“The overall credit growth is still at a satisfactory level if we consider the foreign currency loans, taken by the corporate entities,” the central banker noted.

Currently, outstanding total foreign currency loan stood at around US$8.0 billion, according to the BB official.

About the current credit demand situation, the private banker said fresh credit demands have been squeezed recently following declining trend of commodities including petroleum products prices in the global market. “We’re now investing our excess fund in small and medium enterprises (SME) along with the risk-free government securities.”

He also said the overall growth in credits from the banking system took an upturn, as of the mid July last, as banks lowered a little their interest rates on loans.

As of July 16 last, the overall credit growth rose to 12.82 per cent from 12.66 per cent that was on June 30, 2015.

On the other hand, deposits with the banks also increased, despite the slashing of interest rates.

During the period under review, the growth in bank deposits stood at 12.98 per cent from 12.60 per cent.