Dhaka, Bangladesh (BBN) – The private sector credit growth almost doubled in September 2010, indicating recovery of the country’s economic activities from the sluggish trend of one year back, officials said on Monday.

Credit flow to the private sector recorded a growth of 26.65 percent to BDT 604.374 billion in September on a year-on-year basis, compared to 13.65 percent or BDT 272.491 billion in the same period of the previous calendar year, according to the central bank statistics.

“The credit flow to private sector may decrease by the end of second quarters, following the central bank’s latest move to curb inflationary pressure on the economy,” a senior official of the Bangladesh Bank (BB) said.

He also said recovering global economy with high prices of essentials including petroleum products, edible oil and wheat in the global market has pushed the credit flow to the private sector.

The country’s overall imports grew by over 42 percent in the first quarter of the current fiscal, due to an increase in import of food grains by nearly 229 percent, the central bank officials said.

Letters of credit (LCs) against imports worth US$6.915 billion were settled during July-September period of the 2010-11 fiscal, compared to $4.847 billion of the corresponding period, the BB data showed.

Besides, capital market investment by some commercial banks and non-banking financial institutions (NBFIs) has contributed to the overall credit flow to the private sector during the period, the BB officials said.

On Thursday, the central bank directed four private commercial banks (PCBs) to take measures for reducing their credit growth within the next 14 days to minimize their risks.

One more PCB is expected to get such directive on Wednesday, another BB official said, adding that the central bank has asked the banks to take initiatives for minimizing their credit deposit ratio (CDR) at a rational level.

Currently, the five banks have CDR ranging between 84 per cent and 93 per cent instead of 81 per cent, a standard ratio, the central bank officials confirmed.

BBN/SI/AD-28Dec10-1:18 am (BST)