Growth in credit from banking sector rises

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FE Report The overall growth in credit from the country's banking system witnessed a rising trend during the last week of July following a higher volume of investments in small and medium enterprises (SME) and the agriculture sector, bankers said Wednesday. Credit growth, particularly in the private sector, rose to 8.44 per cent as of August 1, 2013 from 7.56 per cent as of July 18 last while the growth in bank deposits stood at 16.68 per cent, up from 16.66 per cent, according to the central bank statistics. "We've advised the banks to take necessary measures for boosting disbursement of credit to the private sector in line with the current Monetary Policy Statement (MPS)," SK Sur Chowdhury, Deputy Governor of the Bangladesh Bank (BB), told the FE. The central bank has set the private sector credit growth target at 15.5 per cent for the July-December period of the current fiscal year (FY) 2013-14. The deputy governor also said there was a scope to increase the credit flows further to different areas including the SME and agriculture sectors. "At the same time the banks will also have to apply their due diligence before sanctioning fresh loans to minimise credit risks," he added. Earlier on August 25 last, the central bank advised senior bankers at a meeting to take necessary measures for increasing the credit flow to the private sector for sustaining the existing economic growth. "We expect that the rising trend of credit flow will continue in the coming months as the commercial banks have started disbursement of fresh loans to the private sector in line with the central bank's advice," Helal Ahmed Chowdhury, Managing Director and Chief Executive Officer of the Pubali Bank Limited, told the FE. Mr. Chowdhury also said most of the banks were investing in trade financing for utilising their increased volumes of foreign exchange. Talking to the FE, another BB official said the growth in credit indicated that the banks were providing fresh loans to different sectors including productive ones. The credit-deposit ratio (CDR) of all the banks rose to 73.34 per cent as of August 01 last from 73.23 per cent as of July 18, 2013, the BB data showed. The central bank earlier set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Sharia-based Islamic banks. Besides, outstanding advances excluding those of the inter-bank market in the country's banking sector stood at Tk 4433.67 billion as of August 1 from Tk 4375 billion as of July 18 while outstanding deposits excluding the inter-bank deposits rose to Tk 5,783.97 billion from Tk 5,712.14 billion, according to the central bankers. Currently, some corporate entities, particularly mobile phone operators, are now showing interest in collecting loans from the local market along with overseas one, according to senior bankers.