Dhaka, Bangladesh (BBN) – The declining trend of private sector credit growth continued until October due mainly to the ongoing confrontational politics centring ahead of the January 5 parliamentary election, officials said.

The private sector credit growth came down to 11.04 percent in October 2013 from 11.07 per cent in September, the previous month. The credit growth rate was 20.60 per cent in October 2012.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said, private sector credit growth has decreased continuously following disruption in business activities due mainly to the political turbulence in the recent months.

Bangladesh’s overall business activities came under tremendous pressure in the recent months following frequent spells of blockades and shutdowns, enforced by the opposition parties over formation of the poll-time government.

The central bank has already advised the commercial banks to expedite credit flow to the private sector for achieving maximum economic growth, according to the BB official.

Earlier on August 25 last, the central bank advised the senior bankers at a meeting to take necessary measures and boost disbursement of credit to the private sector for sustaining the existing economic growth.
Senior bankers, however, feared that the declining trend of private sector credit growth might continue in the months to come, if the political standoff is not resolved immediately.
"Most of the businessmen are watching the current political situation closely. They are following a 'go-slow' policy on fresh investments to avert any financial risks," a senior official of a leading private commercial bank (PCB) said, adding that availability of loans from overseas sources with lower interest rates also contributed to the lower growth in private sector credit.

He also said profits of commercial banks might fall by the end of the current calendar year following the lower in private sector credit.
BBN/SSR/AD-18Dec13-11:14 am (BST)