Dhaka, Bangladesh (BBN)- The average credit growth of the country’s four state-owned commercial banks (SoCBs) has recently entered into negative territory, following lower disbursement of fresh loan to their clients.

Senior bankers said repayment of loan against the Bangladesh Petroleum Corporation (BPC), maintaining a cautious attitude in sanctioning fresh loan, and the ongoing political turmoil are responsible for the SoCBs’ negative credit growth.

The Bangladesh Bank’s (BB) latest data showed the average credit growth rose to -3.14 percent as on September 26 from -0.39 percent as on August 1 last. It was 5.0 percent in June 30.

 “The central bank has already advised all banks, including the SoCBs, to take necessary measures to expedite credit flow to the private sector for achieving maximum economic growth,” a BB official told BBN in Dhaka.

He also said the central bank is ready to provide policy support to the banks on case-to-case basis to raise credit flow to the private sector.

The SoCBs’ amount of loan has dropped significantly after the government repaid theBPC’s liabilities amounting to BDT 5.93 billion through issuance of bond.

The Ministry of Finance issued the bond in favour of three SoCBs – Sonali Bank Limited, Janata Bank Limited and Agrani Bank Limited – on June 29. The amount was adjusted with the three SoCBs’ accounts from July 2013, another BB official said.

The fourth SoCB – Rupali Bank Limited – has, however, maintained a ‘healthy’ credit growth despite the ongoing political uncertainty centring the upcoming general election.

The central banker also said negative growth does not indicate that there is no new loan disbursement by the SoCBs.  “Actually the banks have disbursed less fresh loan than their recovery,” he explained.

He also said the SoCBs are now actively lending to the country’s ‘less risky’ money market that indicates their ‘healthy’ liquidity position.

The SoCBs have already taken different measures, including strengthening monitoring and supervision, to boost their credit disbursement in line with the BB’s advices.

BBN/SSR/AD-07Nov13-12:47 pm (BST)