Dhaka, Bangladesh (BBN)– Bangladesh’s private-sector credit growth decreased significantly in February as some banks, particularly private ones, faced liquidity pressure due mainly to unavailability of funds, bankers said.
Credit growth came down to 12.54 per cent this February on a year-on-year basis from 13.20 per cent a month ago, showed the central bank’s latest statistics released on Tuesday.
This growth was 3.96 percentage points lower than the Bangladesh Bank (BB)’s target of 16.50 per cent for second half (H2) of the current fiscal year.
Talking to the BBN, a senior private banker said a good number of banks are still facing liquidity pressure due to unavailability of funds, especially individual deposits.
Individual deposits are being diverted to government schemes due mainly to higher interest rates on public savings instruments than deposit rates offered by the banks, according to the banker.
Currently, banks are offering interest rates on term deposits ranging between 6.00 per cent and 11 per cent.
However, most of the offered rates were fixed at 9.50-10.50 per cent.
On the other hand, yields on national savings certificates have been fixed between 11 per cent and 12 per cent.
The falling trend in the private-sector credit growth may continue in the coming months until liquidity situation improves, he predicted.
The central bank is trying to keep the money market stable using different monetary instruments, according to a BB senior official.
However, the total outstanding loans with the private sector rose to BDT 9,703.49 billion in February 2019 from BDT 8,622.25 billion a year ago. It was BDT 9,638.08 billion in January 2019.