Banks\\\' CDR falls below 70pc

The credit-deposit ratio (CDR) of all banks that came down again to below 70 per cent in the last week of August indicates lower business activities in the country's banking sector, bankers said.
All banks' CDR came down to 69.91 per cent, as of August 28 last, from 70.42 per cent as of July 24, 2014. It was 69.92 per cent on March 27 last, according to the central bank statistics.
"Higher deposit growth than that of credits influenced the overall credit-deposit ratio," a senior official of a leading private commercial bank (PCB) explained.
The Bangladesh Bank (BB) earlier set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Sharia-based Islamic banks.
The private banker also said the core business of banks witnessed a stagnated situation in the recent months due mainly to lower credit growth, particularly in private sector.
The overall growth in credits from the country's banking sector came down to 11.08 per cent as of August 28 last from 11.74 per cent as of July 24, 2014 while the deposit growth fell to 14.48 per cent from 16.13 per cent.
"Most of the entrepreneurs still maintain a 'go-slow policy' for setting up new industries or expansion of their business operations due mainly to lack of adequate infrastructural facilities," the PCB official observed.
He also said the investment situation is yet to improve at satisfactory level even after nine months of the national elections, held on January 5.
"Actually, we are now investing in trade financing along with the risk-free government securities," the banker noted.
Talking to the FE, a senior official of the BB said the credit demand would rise in the coming months if the declining trend of interest rates on lending, particularly for corporate entities, continues.
"The credit growth is still at a satisfactory level if we consider the foreign currency loans, taken by the corporate entities," the central banker said.
Currently, outstanding total foreign currency loan stood at more than US$3.5 billion, he added.
He also said outstanding deposit balance and credit are increasing continuously in terms of volume but the deposit growth is comparatively higher than that of credit.
All banks' deposit balance rose to Tk 6,721.50 billion as of August 28 last from Tk 6655.44 billion as of July 24, 2014 while outstanding loan stood at Tk 4,906.29 billion from Tk 4,896.54 billion, the BB data showed.
The BB earlier advised the banks to take necessary measures for boosting disbursement of credits to the private sector in line with the current Monetary Policy Statement (MPS).
The central bank has set the private sector credit growth target at 16.5 per cent for the July-December period of the current fiscal year (FY) 2014-15.         

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