Dhaka, Bangladesh (BBN)– Credit flow to private sector recorded a rising trend in August after ten months of declining growth, indicating that the country’s overall business activities have started improving slowly.
Private sector credit growth rose to 14.26 per cent in August this year from 14.24 in July last, according to the central bank latest statistics.
“The credit flow to the private sector increased during the period due mainly to the rise in financing mainly import and agriculture,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka on Tuesday.
Both the central bank officials and senior bankers expect that the upward trend of private sector credit might continue in the near future due mainly to recovery of major economies from the global meltdown and restoration of confidence of the country’s business community.
They said project financing, particularly in small and medium enterprises (SMEs), will start rising shortly if the government ensures gas and electricity supplies to the factories.
“The upward trend of private sector credit flow will continue and it will increase gradually,” Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told BBN in Dhaka.
The BB official said the credit flow to the private sector was on the declining trend since October 2008 because of a ‘go-slow’ policy adopted by the businessmen to avoid any financial risk in the face of global economic recession.
The growth came down to 24.72 percent in October 2008 from 26.55 percent in September 2008, the central bank officials confirmed.
The credit flow to the private sector recorded a growth of 14.62 percent to BDT 278.139 billion in August 2009 on a year-on-year basis compared with 26.14 percent or BDT 404.211billion of the previous year, the BB’s data showed.
Disbursement of agricultural credit during July-August, 2009 stood higher at BDT 12.714 billion compared to BDT 9.722 billion in the same period of the previous year.
“Recovery of agriculture credit during July-August, 2009 also stood higher at BDT 19.432 billion compared to BDT 9.688 billion during July-August, 2008,” the central bank said in its ‘Major Economic Indicators: Monthly Update’ – September 2009.
BBN/SS/SI/AD-21October09-1:00 am (BST)
