Private sector credit growth continued to maintain an upward trend in April, six months in a row, as banks are now focusing on disbursement of consumer and farm loans to sustain their profitability, said Bangladesh Bank officials.
Rise in import payment in recent months also put a positive impact on private sector credit growth, they said.
In April, the year-on-year private sector credit growth stood at 16.21 per cent, which is close to the monetary target of 16.50 per cent set by the central bank for the second half of this financial year, according to the BB data.
The year-on-year credit growth rate in the private sector stood at 16.06 per cent in March, 15.88 per cent in February and 15.61 per cent in January this year. The growth stood at 15.55 per cent in December, 15.01 per cent in November and 15.20 per cent in October 2016.
Credit flow to the private sector stood at Tk 7,49,244 crore in April, 2017 against Tk 6,44,733.60 crore in the same month of 2016. The figure was Tk 738,640 crore in March 2017 against Tk 636442.40 crore in the same month of 2016.
Retail banking products helped the private sector to maintain a higher growth, a BB official told New Age.
The banks set interest rate between 8 per cent and 11 per cent for their consumer credit like personal loans as the credit demand from industrial sector has been maintaining a sluggishness for long, he said.
With a view to stimulating consumption in the economy, the central bank has recently doubled the credit card limit to Tk 10 lakh from Tk 5 lakh.
The banks will also be allowed to disburse loan worth Tk 25 lakh through credit card to a client with taking liquid securities like fixed or pension deposit schemes. Previously, the permissible amount was Tk 20 lakh.
The BB official said that import financing had recently increased significantly which also fueled the credit growth in the private sector.
The BB data showed that country’s import increased by 17.43 per cent in April due to rise in payments for industrial raw materials and food products.
The total import bill payments stood at $3.54 billion in April this year, while the figure was $3.02 billion in the same month of 2016.
The government’s mega infrastructure projects have contributed to surge the import payments, the central banker said.
The banks are also giving drive to increase their farm loan disbursement as the rate of interest on the loan is 10 per cent which is higher than that of many consumer loan products.
The banks distributed 98.26 per cent of their annual farm loan disbursement target amount in 10 months (July-April) of this fiscal year of 2016-17.
The banks disbursed Tk 17,244.69 crore in July-April, while the annual disbursement target is Tk 17,550 crore, according to the latest Bangladesh Bank data.
The BB data showed that farm loan disbursement also posted a 22.05 per cent growth in the 10 months of this fiscal year compared with that in the same period of FY16.
Higher farm loan disbursement by the bank also increased the private sector credit growth, the BB official said.
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