The private sector credit growth in the country increased to 16.21 per cent in August year-on-year compared with that of 15.97 per cent in July as banks are now disbursing significant amount of consumer and farm loans to sustain their profitability, said Bangladesh Bank officials.
The growth, however, had decreased in July, the first month of this fiscal year, after maintaining a 10-month upward trend, according to the BB data.
The private sector credit growth had posted a four-year high at 16.56 per cent in the fiscal year of 2015-16.
The central bank has set the private sector credit growth target at 16.60 per cent for the July-December period of FY17.
Credit flow to the private sector stood at Tk 6,71,924.60 crore in August 2016 against Tk 5,78,176.90 crore in the same month of 2015. It was Tk 6,65,311.80 crore in July 2016 against Tk 5,73,668.70 crore in July 2015.
A BB official told New Age on Tuesday that a number of banks had recently gone for aggressive banking by disbursing consumer loans at low rates of interest to ensure profitability, which also played a significant role in pushing up the private sector credit growth.
Outstanding amount of banks’ consumer loans almost doubled in two years, surpassing Tk 50,000 crore as of March 31, 2016, the BB data showed.
The outstanding consumer loan figure increased to Tk 50,508 crore as of March 31, 2016 from Tk 46,008 crore as of March 31, 2015. The outstanding amount of consumer loans was Tk 27,512 crore as of March 31, 2014.
Besides, as of late, the businesspeople have started borrowing from the banks to expand their businesses after a prolonged lull, the BB official said.
The country’s political unrest has recently eased that encouraged the businesspeople to take loans from the banks to expand their enterprises, he said.
In the first two months of FY17, the farm loan disbursement registered a 6.29-per cent growth compared with that in the same period of FY16, the BB data showed.
Banks handed out Tk 1,814.34 crore in farm loans in the July-August period of FY17 against Tk 1,706.96 crore in the same period of FY16.
The BB data showed that the year-on-year credit growth in the overall domestic sector also increased to 12.94 per cent in August from 12.24 per cent in July.
The total credit in the domestic sector stood at Tk 8,01,358.50 crore as of August 2016 against Tk 7,09,551.70 crore as of August 2015. It was Tk 7,97,968.40 crore as of July this year against Tk 7,10,934.50 crore as of July last year.
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