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Private sector credit growth slightly up in July

Mehedi Hasan 
06 Sep 2021 00:00:00 | Update: 06 Sep 2021 00:45:11
Private sector credit growth slightly up in July

Private sector credit growth increased slightly in July, the first month of the current fiscal year, as the country’s economy started overcoming the pandemic-induced shock.

In July, private sector credit growth stood at 8.38 per cent, up from 8.35 per cent in the previous month, Bangladesh Bank data show.

Credit growth has been hovering around 8 per cent for the last few months as businesses remained cautious in making fresh investments.

The figure is 6.42 percentage points lower than BB’s target for the current fiscal year. The central bank kept the private sector credit growth target unchanged at 14.8 per cent for FY21-22. 

BB had said in its monetary policy that the credit demand would pick up in the coming months with the expectation that the economy would reopen soon as the pandemic containment measures are underway.

The credit demand has increased slightly and is expected to grow in the upcoming months when the second tranche of several incentive packages will be disbursed, said Syed Mahbubur Rahman, Managing Director of the Mutual Trust Bank.

However, he warned that the upcoming months are very uncertain if the third wave of the virus hits the country. 

Excess liquidity in the banking sector fell due to the economic revival from the lacklustre situation. 

As of July, the excess liquidity stood at Tk 2,03,000 crore, down from Tk 2,31,462 crore a month ago. The June figure of the surplus fund was at an all-time high.

Meghna Bank Managing Director Sohail RK Hussain said that credit demand is still feeble but will increase in the upcoming months as BB put pressure on banks for raising lending to the Covid-hit SME sector.

The private sector credit growth consistently dropped in the last fiscal year when the global coronavirus pandemic was at its peak. In July last year, the growth was at 9.20 per cent and fell to 7.55 per cent in May of this year as the pandemic killed appetite for credit demand.