Dhaka, Bangladesh (BBN)- The private sector credit growth dropped, marginally, to 18.18 per cent in March, which was below the central bank’s target, officials said on Monday.

The main reason for the decline is attributed to the businessmen’s cautious attitude towards making new investments in the backdrop of global economic recession, they added.

The Bangladesh Bank (BB), the country’s central bank, had set the private sector credit growth at 18.50 per cent by the end of June this year, according to the latest monetary policy, announced by the central bank on January 14, 2009.

The private sector credit growth came down to 18.18 per cent in March from 19.84 in February this year, according to the central bank statistics.

The credit flow to the private sector has declined in the last six months because of a ‘go-slow’ policy adopted by the businessmen to avoid any financial risk against the global economic recession, the central bank officials said.

The credit flow to the private sector has been on the decline since October last year. The growth came down to 24.72 per cent in October from 26.55 per cent in September 2008, the BB’s data showed.

“The investors are very cautious to invest their fresh funds in different sectors. They like to see what are coming in the next budget,” Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told BBN in Dhaka.

“We did not see initiation of any large project during January-March period of this year, indicating lower credit flow to the private sector,” Mr. Bukhtear added.

“The credit flow to the private sector may pick up from the next fiscal,” Association of Bankers Bangladesh (ABB) Chairman K Mahmood Sattar told BBN, adding that the lowering of interest rates on lending would help increase borrowing by the private sector.

The central bank of Bangladesh has capped interest rates on import financing for nine essential food items to a maximum of 12 percent. This would help increase the credit flow to the private sector through boosting of import of the essentials.

“We expect that the credit flow to the private sector will increase from the beginning of the next fiscal year,” Managing Director of the National Credit and Commerce Bank Limited (NCCBL) Nurul Amin told BBN in Dhaka.

He also said overall credit flow to the private sector will dependent on the measures to be taken in the next budget.

Most investors are waiting for the new budget, which might offer some changes in tax structure to facilitate the country’s overall business activities, the bankers added.

The credit flow to the private sector declined by 18.18 percent to BDT323.41 billion in March 2009 on a year-on-year basis from 21.16 per cent orBDT 310.61 billion of the corresponding period of the previous year, the BB’s data showed.

BBN/SS/SI/AD-19May09-12:45 am (BST)