The central bank yesterday instructed banks to lower their loan-deposit ratio to within 83.5 percent by June 30 in a move to reining in the banks' aggressive lending practices.
The Shariah-compliant banks will have to lower their ratio to 89 percent from 90 percent.
The runaway private sector credit growth has compelled the Bangladesh Bank to take this stand, said a central bank official.
Earlier in December last year, the BB blocked Tk 76 crore of two banks with its account as penalty for breaching the ceiling for loan-deposit ratio set by the central bank.
The private sector credit growth stood at 18.13 percent in December last year, which is way past the target of 16.2 percent set by the BB for the first half of the fiscal year.
While unveiling the monetary policy for the second half of fiscal 2017-18, BB governor Fazle Kabir said that the central bank will slash the loan-deposit ratio with the view to ensuring the quality of credit.
“The banks will have to follow the asset-liabilities and foreign exchange risk management. Strict measure will be taken against banks that indulge in excessive lending beyond the limit,” he said.
The private sector credit growth target for the second half of the fiscal year is 16.8 percent.