Private sector credit growth fell slightly again in September mainly due to lower payment obligations particularly back-to-back imports for ready-made garment (RMG) sector, officials said.
The growth in credit flow to private sector came down to 15.34 per cent in September 2016 on a year-on-year basis from 16.21 per cent a month ago, according to the central bank's latest statistics.
The private sector credit growth was 15.97 per cent in July 2016.
"Although the amount of private sector credit increased, it showed a decreasing trend," a senior official of the Bangladesh Bank (BB) explained.
The total outstanding loans with the private sector rose to Tk 6801.37 billion in September 2016 from Tk 5896.86 billion during the same of the last calendar year. It was Tk 6719.35 billion in August 2016.
The official further said such credit growth also dropped due to long Eid vacation in September.
"We expect that the credit growth may pick up in the month of October following upward trend in imports," the central banker noted.
The country's overall imports bounced back in October due to rise in capital machinery imports along with back-to-back imports for RMG sector, another BB official said.
The actual import in terms of settlement of letters of credit (LCs) stood at US$ 1.40 billion in the first two weeks of October. The value of opening of LCs, generally known as import orders, was $ 1.53 billion, the BB data showed.
He also said the country's overall imports dropped significantly in September 2016 compared to the previous month mainly due to lower back-to-back imports for RMG sector along with capital machinery.
The settlement of LCs fell by more than 13 per cent to $ 2.99 billion in September 2016 from $ 3.43 billion in August.
On the other hand, the opening of LCs also decreased by 7.36 per cent to $ 3.53 billion in September from $ 3.81 billion in the previous month.
Back-to-back imports for RMG products, including fabrics and accessories, came down to $ 550 million in September last from $ 701.12 million a month ago while capital machinery imports amounted to $ 206.77 million from $ 246.78 million.
Talking to the FE, Mohammed Nurul Amin, Managing Director and Chief Executive Officer (CEO) of Meghna Bank Limited, said the credit flow has increased mainly in the service sector.
"The credits to the government-contracted projects, including infrastructure development ones are increasing gradually," Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), explained.
Currently, the government is implementing nine projects under a Fast-Track Project Monitoring Committee, headed by Prime Minister Sheikh Hasina.
Agreeing with the BB official, Syed Mahbubur Rahman, Managing Director and CEO of Dhaka Bank Limited, said it's a normal phenomenon.
The growth in credit to the private sector decreased following lower imports during the period under review, he explained.
He further said such credit growth was showing an upward trend in the month of October again after a month's interval.
The central bank had projected that private sector credit would grow at 16.60 per cent in December 2016 and 16.50 per cent in June 2017 respectively. Â
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