Banks have no option but to disburse loans: Governor
The governor said the deposit growth was 6.40% in December 2024 when the total deposit portfolio was Tk18 trillion
Commercial banks will have no alternative but to increase loan disbursement to the private sector as excess liquidity continues to build up in the banking system, Bangladesh Bank Governor Ahsan H Mansur said today (19 January).
He made the remarks while speaking at a seminar titled "Systematic Efforts to Understand Economic Pulse: Importance of Purchasing Managers' Index (PMI)" as the chief guest.
Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) and Policy Exchange Bangladesh (PEB) jointly organised the discussion at MCCI's Gulshan office.
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James Goldman, deputy high commissioner and development director, British High Commission to Bangladesh, was the special guest at the seminar.
The governor said the deposit growth was 6.40% in December 2024 when the total deposit portfolio was Tk18 trillion.
He said that it means an additional liquidity amounting to Tk1.20 trillion was injected into the money market in 2024 but the government borrowed more than Tk1.20 trillion in that year.
The deposit growth is probably 11% by the end of December last, which means an additional Tk2.20 trillion is projected to be injected into the market. But the government is set to borrow over Tk1 trillion this year, according to the governor.
"So, the banks will have enough liquidity to be invested in the private sector. I think banks would start finding borrowers now," he said.
Mansur said they have given policy support to everyone who seeks such regulatory intervention to get rid of various anti-business hurdles.
He also informed that the central bank is eyeing the liberalisation of the foreign exchange market. "We want to see our corporate flags all over the world. That's why we keep building our forex reserve," he added.
Mansur said the country's balance of payments has strengthened following a rise in foreign exchange inflows, while the financial account has already shown significant improvement.
He noted that deposit growth reached around 11% in November, driven by the overall surplus in the balance of payments.
According to him, higher foreign exchange inflows into the economy have directly contributed to the increase in bank deposits.
Mansur noted that the country built its foreign exchange reserves without IMF dollar support and that its external position is currently in surplus.
