Another monetary policy comes with special focus on productive sector

Bangladesh Bank today declared another expansionary monetary policy with a view to injecting required money into the productive sector.

Although the banking watchdog largely missed achieving the private credit growth target last fiscal year, it has kept unchanged the target for this year to help the economy recover from the ongoing pandemic.

Private sector credit growth stood at 8.40 per cent last fiscal year against the target of 14.80 per cent.

The latest monetary policy will emphasise on curbing the credit flow to the unproductive sector such that the manufacturing and productive sector get their desired fund from the banking channel.

"This will help generate employments," Bangladesh Bank Governor Fazle Kabir said in a press release.

Excess liquidity in the banking sector has surged in recent months due to the sluggish economic activities, he said.

But, the ongoing wave of the coronavirus has created an uncertainties in the economy, he said.

So, time is yet to come to withdraw money from the market by changing the monetary tools in phases what the central bank had earlier taken, he said.

 If required, the banking regulator will conduct open market operation to mop up money from the market throughout this fiscal year.

The central bank will also beef up its monitoring on loan disbursement from the stimulus packages such that the fund cannot be misused.