Dhaka, Bangladesh (BBN)– Bangladesh’s private sector credit growth increased slightly in March last following rising trend of import payments ahead of the holy Ramadan, bankers said on Tuesday.
“Trade financing has increased during the period under review to clear import payments particularly for essential commodities ahead of the Ramadan,” a senior official of a leading private commercial bank (PCB) told BBN in Dhaka.
He also said the upward trend of private sector credit growth may continue this month because of higher import payments.
Normally, a large quantity of essential commodities is imported to meet the additional demand of consumers during Ramadan, the month of fasting.
The private sector credit growth rose to 11.46 percent or BDT 500.24 billion in March 2014 on a year-on-year basis from 10.73 percent or BDT 465.48 billion in February last. It was 12.72 percent or BDT 492.32 billion in March 2013.
The country’s overall imports increased significantly in March 2014 due to higher import of food grains and petroleum products, a senior official of the Bangladesh Bank (BB) said.
The overall imports increased by 30.61 percent to $3.44 billion in March last from $2.63 billion in the same period of the previous year, the BB data showed.
The private sector credit growth did not rise substantially despite hefty growth of imports as some corporate entities do not prefer to borrow from the local banks to settle their import payments, another private banker explained.
“Most of corporate entities are receiving loans from overseas sources to clear their import payments,” he noted.
The banker also said available credit demand is yet to be created as businessmen still maintain a wait-and-see policy to avoid financial risks. “Uncertainty is still prevailing in the prospective investors’ minds.”
BBN/SSR/AD-13May14-11:55 pm (BST)