Credit flow to pvt sector records rise in Feb

Upward trend in the disbursement of private sector credit continued in the month of February despite policy interest rates raised by the central bank, officials said. Credit flow to the private sector recorded a growth of 28.34 per cent to Tk 702.79 billion in February 2011 on a year-on-year basis compared to 28.06 per cent or Tk 690.61 billion over that of the previous month, according to the central bank statistics. Bangladesh Bank (BB) officials said the credit flow to the private sector increased during the period under review following rise in financing to small and medium enterprises (SME), agriculture and trade sectors. "Higher import growth with upward trend in prices of essential items including petroleum products and food grains in the global market has pushed up the overall credit flow to the private sector," a BB senior official told the FE Saturday. The country's overall imports grew by over 44 per cent in the first eight months of this fiscal, thanks to a jump by nearly 117 per cent in import of food grains. Letters of credit (LCs) against imports worth US$ 20.604 billion were settled during the July-February period of fiscal 2010-11 (FY 11), compared to $14.272 billion during the corresponding period of the last fiscal, the BB data showed. The overall private sector credit growth has pushed partially the country's inflation rate up measured by the consumer price index recently although the BB as well as the government have taken different measures to curb the inflation, the central bankers and experts said. "The central bank has taken a number of measures to contain inflationary pressures on the economy but it will take more time to get positive outcome," the BB official noted. Under the measures, the BB raised the cash reserve requirement (CRR) by fifty basis points to 6.0 per cent for the commercial banks on December 1 last for curbing inflationary pressure on the economy. On March 10 last, the central bank increased its policy interest rates by fifty basis points to contain inflation.