Monetary policy supportive, but situation is not | Monetary Policy Statement Fiscal Year 2020-21 | The Business Standard
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THURSDAY, JUNE 12, 2025
Monetary policy supportive, but situation is not

Analysis

Ahsan H Mansur
29 July, 2020, 11:25 pm
Last modified: 30 July, 2020, 12:51 am

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Monetary policy supportive, but situation is not

Ahsan H Mansur
29 July, 2020, 11:25 pm
Last modified: 30 July, 2020, 12:51 am
Ahsan H Mansur

The central bank has obviously taken a supportive monetary policy for the fiscal year 2020-21. It has progressed with a view to economic recovery.

But there is a challenge to improve the private sector credit growth scenario to the projected level of 14.8 percent by June 2021.

Because the situation is still unusual, and no one knows when it will become normal. Yes, the Bangladesh Bank has been trying to create an environment for improving banks' lending capacity by cutting policy rates, but it is not that the central bank will provide loans to anybody directly.

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If a borrower thinks that the economic situation is not good, they will not borrow from banks.

However, private credit growth will automatically increase by 10 percent as most of the existing borrowers will fail to repay loans, and banks will get an opportunity to create new loans forcefully by adding interest with the outstanding amount. 

This growth is not coming from any good aspect. Rather, it is coming from bad aspect.

However, the money that would be created against the government's bank borrowing, the central bank's refinance scheme and foreign assets must be utilised cautiously for the productive sectors.

Ahsan H Mansur is the executive director of Policy Research Institute and chairman of Brac Bank

Economy / Top News

Monetary Policy

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