Dhaka, Bangladesh (BBN)– Country’s private sector credit growth fell significantly in December after a rising trend in last two consecutive months as most banks tried to comply with advance-deposit ratio (ADR) rules properly.

The growth in credit flow to private sector came down to 18.13 per cent in December 2017 on a year-on-year basis from 19.06 per cent a month before, according to the central bank latest statistics.

The private-sector-credit growth was 18.63 per cent in October, 2017.

Close monitoring by the Bangladesh Bank (BB) to minimise gap between advances and deposit growth pushed down the flow of credit to the private sector during the period under review, according to the bankers.

They also said the banks were more focused on managing liquidity ratios than in increasing loan book so that numbers look better at the close of year.

“We’ve tried to keep the key indicators including ADR within the regulatory requirements in December as part our balance sheet management,” a senior executive of a leading private commercial bank (PCB) told BBN in Dhaka.

The central bank has expedited its monitoring and supervision since November last calendar year to improve deposit growth than credit one to help check any possible liquidity pressure on the market.

As part of the moves, the BB blocked funds from current accounts of two private commercial banks due to none- compliance with ADR rules in the recent months.

The latest BB moves to tighten belt came against the backdrop of raising trend in credit growth outstripping that of deposit in the recent months.

The growth in deposit, on a year-on-year basis, rose to around 11 per cent in November last from 10.72 per cent as on October 12, 2017. It was 13.13 per cent on December 31, 2016.

The all-bank credit growth rose to 19 per cent in November last from 18.05 per cent as on October 12, 2017. In was 15.32 per cent in December 31, 2016.

Credit growth, particularly in private sector, increased significantly in the recent months due to higher trade financing by the banks for settling import-payment obligations particularly for financing fuel oil, consumer items including food-grains and capital machinery.

Such credit growth has already crossed the target, set by the central bank of Bangladesh in its outgoing monetary-policy statement earlier.

Earlier on July 26 last, the central bank projected in its first half-yearly (H1) monetary-policy statement for the current fiscal year (FY) 2017-18 that the private-sector credit would grow at 16.2 per cent in December 2017 and 16.3 per cent in June 2018 respectively.

The total outstanding loans with the private sector rose to BDT 8470.22 billion in December last from BDT 8269.44 billion in November 2017. It was BDT 7170.19 billion in December 2016.

BBN/SSR/AD