Private sector credit growth dropped further in April as businesses mostly remained shaky in making fresh investments as the country is facing a fresh wave of the Covid outbreak.
As per the BB data released on Thursday, the credit growth dropped to 8.29 per cent in April from 8.79 per cent in the previous month.
The country has entered into a fresh phase of restrictions on movement since the beginning of April when the Covid infection rate increased by over 20 per cent.
As per the Bangladesh Bank data, outstanding credit to the private sector reached Tk 11,64,331.40 crore at the end of April from Tk 10,75,170.60 a year ago.
The amount of outstanding credit to the private sector increased by Tk 89,161 crore due mainly to the implementation of different stimulus packages and the imposition of charges on the existing loans.
The stimulus loans were used by the businesses mainly to sustain their existing capacity, not for business expansion.
The private sector credit growth in April was 6.51 percentage points lower than the central bank’s projection of 14.8 per cent for the fiscal year 2020-2021.
In the current fiscal year 2020-2021, the highest private sector credit growth was 9.48 per cent in September 2020.
BB officials said that the credit growth rate until September 2020 was above 9 per cent but dropped below 9 per cent afterwards when the businesses’ appetite for stimulus funds waned.
To get rid of a huge amount of excess liquidity, banks are now focusing on the consumer segment since the recovery rate of consumer loans is higher than the industrial loans, bankers said.
Some of the banks are offering loans to the retail segment even at 8 per cent interest rate, they said.
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