Ensuring the quality of credits is central to country's second-half yearly (H2) monetary policy coming up amid flurries of criticism about bad loans in the banking sector.
Helping government in achieving maximum economic growth prompts the central bank to focus on quality credit supply into productive activities in crafting the monetary policy, officials said.
Bangladesh Bank (BB) Governor Fazle Kabir will announce the monetary policy statement (MPS) at 2:30 pm Monday (29 January) for the January-June period of the fiscal year (FY) 2017-18.
The MPS is attuned to the priority of helping real sectors in achieving sustainable growth while curbing inflationary pressures on the economy.
The central bank, in formulating the MPS, attached top priority to facilitating investment through increasing credit flow particularly to the real economic sectors, according to the BB officials.
They said the BB will facilitate credit flow to the productive sectors for helping achieve 7.40 per cent GDP (gross domestic product) growth by the end of this fiscal.
Existing liquidity situation, movement of stock market and exchange- rate position will feature prominently in the MPS, the central bankers explained.
The ongoing upward trend in prices of fuel oils and other essential commodities on the global market, possible inflows of remittance and export earnings are expected to be in focus of the next MPS.
"We're trying to handle the inflationary pressures on the economy carefully ahead of the next general election," a BB senior official told the FE while replying to a query.
The country's average inflation as measured by consumer-price index (CPI) rose to 5.70 per cent in December last from 5.64 per cent of the previous month while point-to-point inflation rate fell to 5.83 per cent from 5.91 per cent in November 2017.
The government as well as the central bank had set the inflation target at 5.5 per cent for the FY 18.
In the next MPS, the central bank will also give emphasis on boosting SME and agriculture loans along with microcredit to create employment opportunities across the country, they added.
Earlier on January 07 last, senior officials of the BB at a preparatory meeting emphasised ensuring the quality of credits through strengthening the monitoring and supervision by both the central bank and the commercial banks themselves.
Meanwhile, the private-sector credit growth fell significantly in December after a rising trend in last two consecutive months as most banks tried to comply with advances-deposit ratio (ADR) rules properly.
The growth in credit flow to private sector came down to 18.13 per cent in December 2017 on a year-on-year basis from 19.06 per cent a month before, according to the central bank latest statistics.
The private-sector credit growth was 18.63 per cent in October, 2017.
Such credit growth has already crossed the target set by the central bank of Bangladesh in its outgoing monetary-policy statement earlier.
Earlier on July 26 last, the central bank projected in its H1 monetary policy for the FY 18 that the private-sector credit would grow at 16.2 per cent in December 2017 and 16.3 per cent in June 2018 respectively.
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