The rising trend in private sector credit growth continued until November due to the falling trend in interest rates on lending, bankers said on Thursday.
They also predicted that the upward trend in private sector credit growth would continue in the coming months also, if the political stability persists.
The sector's credit growth rose to 13.72 per cent in November 2015 on a year-on-year basis from 13.22 per cent in October, according to the central bank's latest statistics. The credit growth was 12.88 per cent in September.
"Most of the banks are now offering lower interest rates on lending to encourage good performing corporate clients for expediting their business activities," a senior official of a leading private commercial bank (PCB) told the FE on Thursday.
The weighted average interest rates on lending dropped to 11.27 per cent in November from 12.32 per cent in January last.
But a section of banks are now offering 7.0 per cent lending rate to attract corporate clients particularly, he added.
"We expect that corporate entities will move forward to avail local currency loans instead of foreign currency ones from overseas sources for avoiding exchange rate risk."
He also said the private sector credit growth may increase further in the coming months following an upward trend in import orders in November.
Opening of letters of credit (LCs) against imports, generally known as import orders, grew by about 31 per cent to nearly US$ 4.10 billion in November from $3.13 billion in the previous month.
"The overall private sector credit growth is still at a satisfactory level, if we consider the foreign-currency loans, taken by the corporate entities from both overseas and local sources," a senior official of the Bangladesh Bank (BB) told the FE.
The central bank earlier set the ceiling for private sector credit growth at 14.30 per cent for the July-December period of the current fiscal year (FY), 2015-16.
Currently, the outstanding total foreign currency loans stands at around US$8.0 billion, he added.The outstanding amount of foreign currency credits includes loan extended by Offshore Banking Units (OBUs) of local and foreign commercial banks and direct borrowing by the corporate entities following approval by the Board of Investment (BoI), the central banker explained.
Currently, 33 commercial banks, out of 56, are running their OBUs operations across the country. He also said the upward trend in the private sector credit growth continued until November, as the country's overall business activities were picking up gradually following return of political stability.
The total outstanding loans with the private sector rose to Tk 6,039.23 billion in November 2015 from Tk 5,310.51 billion in the same month of 2014. It was Tk 5,946.77 billion in October last.
© 2024 - All Rights with The Financial Express
