Private sector credit growth edging towards target

Private sector credit growth rose for five months in a row to stand at 16.2 percent at the end of April, which is close to the target set by the Bangladesh Bank for the second half of the fiscal year.

At the end of April, total loans outstanding to the private sector stood at Tk 749,200 crore at the end of April, according to Bangladesh Bank data.

The declining lending rate fuelled the credit demand in the market, said a senior executive of central bank.

The average lending rate came down to 9.62 percent in April from 10.64 percent a year ago, according to central bank data.

Consumer financing also contributed to the rise. As per latest data, total consumer loan rose 14.16 percent from a year ago.

Public sector credit growth, on the other hand, has remained in the negative since the beginning of the fiscal year.

At the end of April, public sector credit growth was 11.8 percent in the negative -- way off from the targeted ceiling of 16.1 percent set in the monetary policy.

The reason being the sales of saving instruments overshot the target.  As of April, savings certificates worth of Tk 42,098 crore were sold against the target of Tk 19,610 crore for the whole fiscal year.

The government had intended to borrow Tk 23,903 crore from the banking system this fiscal year, but instead of borrowing it repaid Tk 16,402 crore, according to finance division data. In the budget for the incoming fiscal year, the government has set the borrowing target at Tk 28,203 crore, 18 percent higher than the current year's.