Dhaka, Bangladesh (BBN)– The rate of credit growth to the private sector fell in January this year following declining trend of the country’s overall import payments, bankers have said.
The private sector credit growth came down to 18.94 percent in January 2012 from 19.40 per cent in December 2011, according to the central bank statistics.
“Trade financing particular in post import ones has dropped significantly in the recent months because of the falling trend of the country’s overall import growth,” a senior official of a leading private commercial bank told BBN, adding that higher call money rate has also discouraged the banks to lend to the private sector.
The inter-bank call money rate was about 20 per cent from November 2011 to February this year as the central bank restricted its liquidity support to the banks aiming to curb inflationary pressures on the economy.
Currently, the banks are quoting the call rates ranging between 11 per cent and 15 per cent, the banker added.
He also said the declining trend of private sector credit growth may continue in the coming months as most banks are not interested to open letters of credit (LCs) for less important products like consumer and luxurious goods in line with the central bank’s advice.
The Bangladesh Bank (BB) earlier instructed the commercial banks to discourage extending credits to less productive sectors for reining in the inflationary pressures on the economy.
The import growth rate came down to 13.63 per cent during the July-January period of the fiscal year (FY) 2011-2012 from about 44 per cent during the corresponding period of the previous fiscal, the central bank officials said.
The credit flow to the private sector decreased by 18.94 percent to BDT 596.90 billion in January last on a year-on-year basis from BDT 690.61 billion during the corresponding period of the previous year, the BB data showed.
BBN/SSR/AD-12Mar12-10:40 am (BST)
