Private sector credit growth increased slightly in December 2016, after experiencing a falling trend in the previous three consecutive months, due to higher trade financing for settling import payment obligations, bankers said.
The growth in credit flow to private sector rose to 15.55 per cent in December 2016 on a year-on-year basis, which, however, was lower than the Bangladesh Bank (BB)'s earlier projection. It was 15.01 per cent in November, according to the central bank's latest statistics, released on Thursday.
BB projected in its first half-yearly (H1) monetary policy statement for the ongoing fiscal year (FY), 2016-17, that the private sector credit would grow at 16.60 per cent in December 2016 and 16.50 per cent in June 2017.
The falling trend in the private sector credit growth started in September 2016 that continued until November last.
In October 2016, the private sector credit growth came down to 15.20 per cent from 15.34 per cent in the previous month, the official data showed.
"The rising trend in the private sector credit growth may continue in the coming months following gradual momentum in implementation of projects under the annual development programme (ADP)," a BB senior official told the FE.
Normally the implementation of ADP attains pace during the second-half (H2) of each fiscal year, the central banker explained.
Talking to the FE, Nurul Amin, Chief Executive Officer and (CEO) and Managing Director (MD) of Meghna Bank Limited, said the private sector credit growth rose slightly in December last following higher trade financing.
The country's actual import in terms of settlement of letters of credit (LCs) increased by more than 9.0 per cent or US$ 349.61 million to $ 4.12 billion in December 2016 from $ 3.77 billion in the previous month.
On the other hand, the opening of LCs, generally known as import orders, grew by more than 7.0 per cent to $ 4.70 billion in December from $ 4.37 billion in November 2016.
Besides, charging quarterly interest on outstanding loans has pushed up the private sector credit growth during the period under review, added Mr Amin, also a former chairman of Association of Bankers, Bangladesh (ABB).
The total outstanding loans with the private sector rose to Tk 7,170.19 billion in December last from Tk 6,945.58 billion in November 2016. It was Tk 6,205.07 billion in December 2015.
Echoing the BB official, Syed Mahbubur Rahman, Managing Director and CEO of Dhaka Bank Ltd, said the private sector credit growth may increase further in the coming months following implementation of different mega projects in the country.
Currently, the government is implementing nine projects under a Fast Track Project Monitoring Committee, headed by Prime Minister Sheikh Hasina.
Besides, a rising trend in prices of some commodities, including edible oil and scrape vessels, in the global market may push up the private sector credit flow in near future, the senior banker noted.
siddique.islam@gmail.com
