Credits to pvt sector see crunch in July

Private-sector credit growth tumbled in July after a continuous increase in last10 months, said officials, who saw the crunch as a seasonal phenomenon.
The growth in credit flow to private sector declined to 15.97 per cent in July 2016 on a year-on-year basis from 16.78 per cent in June last, according to the central bank's latest statistics.
Such credit growth had risen since September 2015 up till June 2016, the official figures showed.
"It's purely a seasonal impact. Initial data showed that the private-sector credit growth rebounded in the month of August 2016," a senior official of the Bangladesh Bank (BB) told the FE.
The growth dwarfed during the period under review due to higher recovery of loans, particularly short-term ones, than fresh disbursement by the banks, the central banker explained.
He also said prolonged Eid vacation in July had also worked to push down such credit growth.
The central bank had projected that private-sector credit would grow at 16.60 per cent in December 2016 and 16.50 per cent in June 2017 respectively.   
Echoing the BB official's reasoning, Mehmood Husain, managing director and chief executive officer of NRB Bank Limited, said the growth in credits to the private sector decreased following lower imports during the period under review. "Such credit growth was showing an upward trend in August again after a month's interval," the senior banker hinted.
The country's overall imports registered a significant fall in July, the first month of the current fiscal year (FY) 2016-17, because of lower commodity prices on the global market, another BB official said. The settlement of letters of credit (LC), generally known as actual import, dropped by 18.42 per cent to US$2.80 billion in July of the FY 17 from $3.44 billion in the same period of the last fiscal.
"We expect that the overall imports may pick up in the coming months as the import orders increased in July," the BB official told the FE.
He also said import decreased in terms of value, not volume.
The total outstanding loans with the private sector came down to Tk 6653.12 billion in July 2016 from Tk 6710.09 billion in June last.  It was Tk 5736.69 billion in July 2015.
    [email protected]