29.13pc growth in credit flow to pvt sector in March

FE Team | Published: May 16, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Siddique Islam
The upward trend in the disbursement of private sector credit continued in March although there is a June 30 deadline to bring down the credit-deposit ratio (CDR) of the commercial banks, set by the central bank. Credit flow to the private sector recorded a growth of 29.13 per cent to Tk 731.02 billion in March 2011 on a year-on-year basis compared to 28.34 per cent or Tk 702.79 billion over that of the previous month, according to the central bank statistics. "The credit flow to the private sector however started a declining trend in the month of April that would continue till the end of June this year," a senior official of Bangladesh Bank (BB) told the FE Sunday. The central bank official also said the private sector credit disbursement increased during the period under review following rise in financing to small and medium enterprises (SMEs), agriculture and trade sectors. "Higher import growth with rising trend in prices of essential items including petroleum products, capital machinery and food grains in the global market has also pushed up the overall credit flow to the private sector," the BB official added. The country's overall imports grew by nearly 42 per cent in the first nine months of this fiscal, due to a jump by 122 per cent in import of food grains, the central bank official said. Letters of credit (LCs) against imports worth US$ 23.507 billion were settled during the July-March period of fiscal 2010-11 (FY11), compared to $ 16.588 billion during the corresponding period of the last fiscal, the BB data showed. Bankers, however, said the credit flow to the private sector decreased in April 2011 following most of the commercial banks, particularly private commercial banks (PCBs), having squeezed loans to bring down their CDR at a safe limit by June 30 this year. "We continued the disbursement of loans to the clients until March 2011 for fulfillment of our previous commitments," a senior official of a leading private commercial bank told the FE. He also said most of the PCBs are now discouraging credit to 'unnecessary imports' as well as less productive sectors aiming to bringing down their CDR at the rational level within the stipulated timeframe. On February 20 last, the central bank of Bangladesh set June 30 as deadline for bringing down the CDR of the commercial banks to a reasonable level. Under the directives, 19 conventional commercial banks will have to bring down their CDR to 85 per cent while five Sharia-based Islamic banks to 90 per cent by June 30 next.