Jan credit flow to pvt sector slows

Private-sector credit growth fell in January over the previous month mainly as businesspeople were on the watch over the ongoing political turmoil before deciding on business start-ups, bankers said Wednesday.
The growth in the credit flow to the private sector came down to 13.33 per cent in January last from 12.50 per cent in December last. It was 12.67 per cent in November.
"The growth in credit flow to the private sector may decrease further in the coming months, if the current political turmoil continues," a senior official of a leading private commercial bank (PCB) told the FE.
He said most businesspeople were watching the current political situation closely before taking any new business decision.
"The businessmen are also following a 'go-slow' policy on fresh investment to avert any financial risk. Even some of businessmen are not withdrawing funds against their loans sanctioned earlier," the private banker explained.
He noted that investments in different sectors, including trade financing, had been on the decrease during the period under review as a result of downturn in overall imports for business slowdown amid the prolonged transport blockade enforced by the BNP-led 20-party alliance.
Opening of letters of credit (LC) for import, generally known as import orders, decreased more than 7.0 per cent to US$ 3.20 billion (320 crore) in January from $ 3.45 billion in the same period of the previous calendar year.
On the other hand, LC settlement-which stands for actual imports-dropped 7.54 per cent to $ 3.04 billion during the period under review from $ 3.29 billion in January 2014.
The banker also said the supply chain had been affected since January 5 last in the face of the countrywide blockade and shutdowns, enforced by the BNP alliance over electoral issues.
The total outstanding loans with the private sector stood at Tk 5,418.82 billion this January against Tk 4,781.29 billion in the same period of the previous calendar year. It was Tk 5,434.07 billion in December 2014.
Talking to the FE, another senior banker said availability of loans from overseas sources at lower interest rates also contributed to the lower growth in private-sector credits.
The Bangladesh Bank (BB) earlier had set the ceiling for private-sector-credit growth at 15.5 per cent for the January-June period of the current fiscal year (FY) 2014-15.
"We're ready to increase the ceiling of private-sector-credit growth in line with requirement," BB Governor Dr Atiur Rahman told reporters while announcing the Monetary Policy Statement (MPS) for the second half (H2) of this fiscal on January 29 last.
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