Private sector credit sees 8.77% rise in Sep

Credit flow to the private sector has registered an 8.77% growth in September from 8.42% in August, mainly because of growing demand for working capital, according to sources at the Bangladesh Bank.

The credit growth had maintained a downtrend in the first few months this year owing to the pandemic-led uncertainties, which saw a historic low of 7.55% in May.

However, private credit growth recovered to 8.35% in June this year when economic activities started to return to normal. Since then, the credit flow has been growing gradually as reflected in July and August figures – 8.38% and 8.42%. 

However, the growth is still lower than the central bank's target of 14.8%.

Bankers and businesspeople say credit flow to the private sector has been increasing since the beginning of the current fiscal year on the back of new investments. 

Dr Salehuddin Ahmed, former governor of Bangladesh Bank, told The Business Standard that a rise in private sector credit growth signals the reopening of economic activities. Banks should give loans to good borrowers as lending to defaulters is not good for the country's economy.  

But, such credit is mainly going to real estate and vehicle purchases, which has both positive and negative impacts. Above all, the rise in private sector credit growth will help the economy get back its usual pace, he added. 

In the meantime, the dollar has been gaining against taka owing to increased import payments in particular.

Central bank data shows in July-August this year, Bangladesh's imports amounted to $10.84 billion, while exports were $6.73 billion.