Dhaka, Bangladesh (BBN) – The credit growth to the private sector witnessed a rising trend in February this year, following increased trade financing, after facing fall in the past few months, bankers said on Thursday. 
“It’s a temporary phenomenon,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka, adding that the private sector credit growth has already recorded a declining trend in March. 
The rate of private sector credit growth rose to 19.55 percent in February last from 18.94 percent in January 2012, according to the central bank statistics.
Commercial bank officials, however, said the credit growth to the private sector increased slightly during the period under review, mainly due to the rise in trade financing, particularly for scrap vessels.
Talking to the BBN, a senior official of private commercial bank said higher import of scrap vessels has pushed the credit flow to the private sector to some extent in February.
The import orders for scrap-vessels increased by 123 per cent to $134.49 million in February 2012 from $60.26 million in January 2012, while the letters of credit (LCs) against imports worth $66.82 million were settled in February against $83.28 million in January, the BB data showed.
The bank official also said the credit flow to the private sector may fall in the coming months, as most banks are not interested to open LCs for less important products, like consumer and luxurious goods, in line with the central bank’s advice.
The credit flow to the private sector rose to BDT 622.29 billion in February 2012 on a year-on-year basis from BDT 702.79 billion in the corresponding month of the previous year.
The central bank of Bangladesh earlier asked the commercial banks to discourage extending credits to less productive sectors for reining in the inflationary pressures on the economy.
BBN/SSR/AD-05Apr12-11:36 pm (BST)