Dhaka, Bangladesh (BBN) - Private sector credit growth decreased significantly in the month of August last mainly due to political unrest that led to the fall of Sheikh Hasina government on August 5, 2024, officials said.
Lower import payment obligations along with the severe flooding that devastated the country's eastern region have also pushed down the private sector credit growth, they added.
The growth in credit flow to the private sector came down to 9.86 per cent in August 2024 on a year-on-year basis from 10.13 per cent a month ago, according to the central bank’s latest statistics.
It was 0.06-percentage points higher than the Bangladesh Bank (BB) target of 9.80 per cent for the first half (H1) of current fiscal year (FY) 2024-25.
Talking to BBN, a senior official of the central bank said the ongoing trend of private-sector growth may continue in the coming months with the continuation of existing contractionary monetary-policy stance to curb inflationary pressure on the economy.
He also said some challenges, such as persistent high inflation, gas and power crises, corruption, dollar shortages and a sharp depreciation of the taka have also been responsible for lower private sector credit growth.
“Country’s business community maintained a 'wait-and-see' policy for making fresh investment in different sectors," a senior executive at a leading private commercial bank said while explaining the latest business environment of Bangladesh.
The private banker also said trade finance along with general investment decreased following lower import expenses as well rising trend of inflation in recent months.
Meanwhile, outstanding loans with the private sector rose to BDT 16427.03 billion in August from BDT 16359.16 billion a month before. It was BDT 14952.57 billion in August 2023.
BBN/SSR/AD