Dhaka, Bangladesh (BBN) – The overall growth in credit from the banking system witnessed a rising trend during the last week of July following a higher volume of investments in small and medium enterprises (SME) and the agriculture sector, bankers said.
Credit growth, particularly in the private sector, rose to 8.44 percent as of August 1, 2013 from 7.56 percent as of July 18 last while the growth in bank deposits stood at 16.68 percent, up from 16.66 percent, according to the central bank statistics.
“We’ve advised the banks to take necessary measures for boosting disbursement of credit to the private sector in line with the current Monetary Policy Statement (MPS),” a senior officials of the Bangladesh Bank (BB) told BBN in Dhaka.
The central bank has set the private sector credit growth target at 15.5 per cent for the July-December period of the current fiscal year (FY) 2013-14.
The central banker said there was a scope to increase the credit flows further to different areas including the SME and agriculture sectors. “At the same time the banks will also have to apply their due diligence before sanctioning fresh loans to minimise credit risks,” he added.
Earlier on August 25 last, the central bank advised senior bankers at a meeting to take necessary measures for increasing the credit flow to the private sector for sustaining the existing economic growth.
Talking to the BBN, another BB official said the growth in credit indicated that the banks were providing fresh loans to different sectors including productive ones.
The credit-deposit ratio (CDR) of all the banks rose to 73.34 percent as of August 01 last from 73.23 percent as of July 18, 2013, the BB data showed.
The central bank earlier set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Sharia-based Islamic banks.
Besides, outstanding advances excluding those of the inter-bank market in the country’s banking sector stood at BDT 4433.67 billion as of August 1 from BDT 4375 billion as of July 18 while outstanding deposits excluding the inter-bank deposits rose to BDT 5,783.97 billion from BDT 5,712.14 billion, according to the central bankers.
“We expect that the rising trend of credit flow will continue in the coming months as the commercial banks have started disbursement of fresh loans to the private sector in line with the central bank’s advice,” a chief executive of a leading private commercial bank (PCB) told BBN in Dhaka.
He also said most of the banks were investing in trade financing for utilising their increased volumes of foreign exchange.
BBN/SSR/AD-19Sept13-12:15 pm (BST)