Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has enhanced the credit-growth limits for three state-owned commercial banks (SoCBs) for this calendar year despite their higher classified loans.
The annual credit growth limit for Sonali, Janata and Rupali have been re-fixed at 10 per cent, 12 per cent and 15 per cent respectively, up from 6.0 per cent, 10 per cent and 12 per cent a year ago, according to the officials.
Agrani’s loan-growth ceiling stayed at the same level as of last calendar year at 10 per cent.
Talking to BBN, a senior official of the Bangladesh Bank (BB) said the central bank has enhanced the credit-growth limits of the SoCBs in line with the ongoing monetary policy statement (MPS) along with their latest performances.
“We’ve considered different indicators including the amount of non-performing loans of the SoCBs before revising their credit growth limits,” the central banker explained.
He also said the latest BB’s measure will help in achieving over 7.0 per cent GDP (gross domestic product) growth by the end of FY 17.
On the other hand, Salehuddin Ahmed, former governor of the BB, although the enhancement of the SoCBs credit growth is needed to help achieve MPS targets, such measure is not appropriate if their performances are taken into consideration.
Dr. Ahmed’s observations in the wake of the non-performing loans (NPLs) amounts having risen by nearly 41 per cent or BDT 50.96 billion of the three SoCBs in the first half of the current calendar year.
The aggregate amount of NPLs with the three SoCBs rose to BDT 175.75 billion as on June 30 last from BDT 124.79 billion as on December 2015.
On July 26 last, the central bank of Bangladesh unveiled its ‘cautiously accommodative’ monetary policy for the first half of this fiscal year (FY), 2016-17, aiming to achieve maximum economic growth through boosting investment particularly in productive sectors.
The central bank has set the ceiling for private-sector credit growth at 16.50 per cent until June 2017 from 14.80 per cent a year ago.
The former governor also said the central bank should monitor and supervise such loans closely to ensure proper use of such credits.
Talking to BBN, a senior official of the Sonali Bank Limited said the largest SoCB is interested to invest more in productive sectors through using its network across the country.
“We’ve enough excess liquidity that is now being invested in money market along with government securities with lower interest rates,” the senior banker explained.
In 2015, the Sonali Bank’s credit growth stood at negative 5.26 per cent while the Janata Bank achieved 9.9 per cent loan growth, the BB data showed.
On the other hand, credit growth of the Agrani Bank and Rupali Bank stood at 9.6 per cent and 11.9 per cent respectively in the last calendar year.
The BB has set the credit-growth limit in line with the memoranda of understanding (MoU) signed between the BB and the SoCBs earlier for improving financial health of the public sector banks.