Credits from all the banks fell slightly in ratio with the deposits, as of the third week of February, which indicates a sluggish trend in the country's banking businesses owing to uncertainties.
Sources in the banking circles attributed the tipping of the credit-deposit ratio (CDR) to the ongoing political unrest that prompted the businesses to make a pause.
The CDR came down to 70:79 as of February 19 from 70:97 as of December 31, according to the central bank's latest statistics.
Senior bankers feared that the overall profitability of the banking sector may be affected by the end of the first quarter of this calendar year if the political impasse continued."Most banks may not achieve their operational profit targets during the first quarter of the current calendar year due mainly to the political turmoil," Nurul Amin, Chief Executive Officer (CEO) and Managing Director (MD) of Meghna Bank Limited, told the FE Friday.
Potential customers are maintaining a 'go-slow' policy for fresh investment in different sectors, including project financing, to avoid their risks, Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), explained.
"Even some borrowers are not withdrawing funds against their loans sanctioned earlier," he said.
Talking to the FE, another senior official of a private commercial bank said fresh credit demands have been squeezed during the period under review following a slump in prices of commodities, including petroleum products, on the global market.
He fears the volume of classified loans also may increase in the first quarter of this calendar year because some borrowers are not being able to maintain their payment commitment with the banks.
The supply chain has been affected since January 5 following the countrywide blockade and shutdowns, enforced by the BNP-led 20-pary alliance over the politico-electoral issues, the private banker added.
Overall deposits, excluding inter-bank ones, fell 0.31 per cent to Tk 7082.53 billion during the period under review from Tk 7104.73 billion as of December 31.
On the other hand, total outstanding credits, excluding inter-bank loans, decreased by 0.71 per cent to Tk 5249.91 billion as of February 19 last from Tk 5287.55 billion on December 31.
Lower credit growth than that of deposits tipped the credit-deposit balance, a senior official of the Bangladesh Bank (BB) told the FE.
The central bank earlier had set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Sharia-based Islamic banks.
The BB official claimed the situation had already started improving, as indicated by credit and deposition positions in the recent days.
"We expect that the rising trend in credits and deposit will be expedited further if the ongoing political crisis is resolved," he noted.
The central banker also said there is a scope to increase the credit flows further into different areas, including the small and medium enterprises (SME) and agriculture.
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