Private sector credit growth hits 41-month high in May
Private sector credit growth in the country peaked at a 41-month high in May this year, as it was 12.94% higher compared to the same period last year.
This growth is the highest since January 2019, when it was 13.20%.
According to the latest data from Bangladesh Bank, the credit growth of May was 1.86 percentage points lower than the Bangladesh Bank's target for the current fiscal year. The regulator had fixed the credit growth target at 14.8% for FY22.
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Besides, credit growth in the private sector was 12.48% in April this year.
According to industry insiders, the upward trend in private sector credit growth will also continue in the coming days as the industry is expanding again after the second wave of the Covid-19 pandemic. Also, loans will increase due to the recent price hike of goods in the global market.
When Covid-19 infections were first reported in the country in March 2020, the credit growth in the private sector was very low. The credit growth fell to nearly 4% during the lockdown period.
According to the central bank, private sector credit growth stood at 7.55% in May last year, but it has been on the rise since then.
In this regard, the managing director of a private bank said, "Private sector credit is currently increasing due to the increase in demand for loans due to the expansion of the industry after the Covid-19 epidemic."
"In addition to the extra cost of redesigning supply chains due to the Ukraine-Russia war, rising world market prices have led to an increase in loans in the private sector with this growing trend of import financing," he added.
The country's import payments rose by 48.25% to $67.86 billion from July to April of the current fiscal year, marking a sharp increase since the second wave of the Covid-19 pandemic.
Credit growth has also increased in the industrial sector as well. Industrial loan disbursement registered 33.75% growth in the January-March quarter of the current fiscal year compared to the corresponding period last year, according to data released by the central bank.
According to the data, the country's industrial sector borrowed Tk127,671 crore in January-March period, while the bank borrowing was Tk90,966 crore in the same quarter last year marked by Covid-led business slowdown.
