Dhaka, Bangladesh (BBN)– The private sector credit growth rebounded in May, following higher trade financing due to the holy month of Ramadan, officials said.
The growth bounced back in the last month after maintaining a falling trend in the previous seven consecutive months.
Such growth rose to 12.16 per cent in May 2019 on a year-on-year basis from 12.07 per cent a month ago, according to the central bank’s latest statistics.
The growth, however, was 4.34 percentage points lower than the Bangladesh Bank’s (BB) target of 16.50 per cent for the second half (H2) of last fiscal year (FY), 2018-19.
The declining trend in the private sector credit growth started in October 2018 that continued until April 2019. In October 2018, the private credit growth was 14.72 per cent.
They also said that the private sector credit growth will increase slightly in June, as liquidity situation has gradually improved.
The banks provided higher trade financing to settle import payment obligations in May, particularly for essentials, they explained.
Usually, a large quantity of essential commodities is imported to the country to meet the additional demand of consumers during the month of Ramadan.
The country’s actual import in terms of settlement of letters of credit (LCs) rose to US$4.65 billion in May 2019 from $4.57 billion a month before, the BB data showed.
Talking to the BBN, M A Halim Chowdhury, managing director (MD) and chief executive officer (CEO) of the Pubali Bank Limited said it’s a normal credit growth
He also predicted that the private sector credit growth will rise further in June.
The central bankers, however, emphasised proper use of credit for achieving optimum economic growth, saying the quality of credit will have to be ensured to attain the desired GDP (gross domestic product) growth.
The central bank has already taken some measures, including devolvement of the government’s borrowed money on its own account to facilitate improving liquidity in the market, they added.
“It will take some time,” Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), said while replying to a query about the liquidity situation.
Meanwhile, the total outstanding loans with the private sector rose to BDT 10,009.18 billion in March 2019 from BDT 8,924.03 billion a year ago. It was BDT 9,879.29 billion in April 2019.