Credit growth up in Dec
Private-sector credit growth reached 14.19 percent in December 2015, which is 0.69 percentage point higher year-on-year.
To achieve 7 percent economic growth in the current fiscal year, the central bank has set a private credit growth target of 14.8 percent by June.
Credit growth is accelerating as the rate of interest has fallen and a political calm exists in the country at the moment, said Abul Kashem, a deputy governor of Bangladesh Bank.
The central bank wants quality credit growth, which will support actual economic growth, according to Kashem.
In the latest monetary policy statement, the BB said a provision of 14.8 percent private credit growth appears to be adequate to support 7 percent growth for the current fiscal year. "A new focus on credit quality is on the rise," it said.
The MPS, released last month, said 2016 enters a new era of lower interest rates.
The average lending rate fell from 12.48 percent in July 2014 to 11.27 percent in November 2015, which also increased credit growth, according to central bank data.
Credit growth slowed since mid-2013, according to the International Monetary Fund.
Rising corporate borrowing from abroad has reduced reliance on domestic credit, said the IMF. Finally, the 2010–12 stockmarket crash had some impact on private credit demand, which also hit the banks that were significantly exposed to the stockmarket, potentially affecting credit, it added.
Between 2010 and mid-2013, private sector credit grew rapidly and reached the highest level, at 26 percent, according to BB statistics.
At that time, the BASIC Bank and Hall-Mark scams took place. Banks had also made excessive investment in the stockmarket at that time.
Comments