Challenge remains for banking sector
Kazi Zahidul Hasan :
Overall bank lending increased by 14 per cent in 2014, thanks to political stability that prevailed in the country throughout the year.
In 2013, the overall bank lending recorded a meager growth of 7.41 per cent.
The loan growth was reported by the Bangladesh Bank (BB) on Sunday.
Insiders in the central bank said the latest figure of bank lending might come as a big solace for the banks which rattle with lower credit growth for the last couple of years taking a heat from investment crunch in the country due to infrastructure bottleneck coupled with political uncertainty.
Schedule banks have geared-up their lending activities taking advantage of an apparent relative political clam in 2014 resulting in significant growth in overall bank lending, they added.
As on December 2014, the banking sectors’ lending stood at Tk 5, 28,755 crore which was Tk 4, 63,871 crore in 2013. That means, the overall lending has increased by Tk 64,884 crore just in a period of one year.
At the same time, the deposit collection by the banks has witnessed a 13.26 per cent growth last year which was 16.26 per cent the previous year (2013).
All the banks have mobilized Tk 7, 10,473 crore deposit in 2014 compared with Tk 6, 27,296 crore in 2013.
“A stable political environment helped the bank lending grow significantly in 2014. Banks have offered rate cuts which also largely influenced overall bank lending,” M Mahfuzur Rahman, an Executive Director of BB told The New Nation on Monday.
He said that the banking sector had started recovering from the lending crisis struck in 2013 in the wake of political turmoil centering the election.
The BB data showed that the deposit growth in state-owned commercial banks has marked an increase of 11.78 per cent whereas their loan growth was recorded at 8.36 per cent in 2014.
In the specialized banks, the deposit growth was 20.22 per cent and lending growth was 19.9 per cent. The deposit growth in the private sectors’ commercial banks was 15.52 per cent and lending growth was 17.51 per cent.
The deposit and lending growth, however entered in negative territory during the year, marking -1.47 and -2.55 per cent respectively.
BB officials said that bank lending was higher during the second half of last year from that of the first half of the year 2014.
“Banks did not show much interest in providing fresh loans to corporate houses and business entities during the first half of the last year fearing fresh political unrest leading to sluggish lending growth. Such a trend also helped piling up huge excess liquidity in the banking industry,” said another senior BB official.
He added most of the banks stepped up their efforts to accelerate lending activities during the second half of the same year by cutting lending rates. This has created a greater credit demands from the businesses and helped boost bank lending.
When asked, he said, challenges remain for banks as the country has already plunged into deep political crisis again. “If the situation prolongs, all kinds of commercial lending by banks will mark significant fall in the current year,” he added.
Overall bank lending increased by 14 per cent in 2014, thanks to political stability that prevailed in the country throughout the year.
In 2013, the overall bank lending recorded a meager growth of 7.41 per cent.
The loan growth was reported by the Bangladesh Bank (BB) on Sunday.
Insiders in the central bank said the latest figure of bank lending might come as a big solace for the banks which rattle with lower credit growth for the last couple of years taking a heat from investment crunch in the country due to infrastructure bottleneck coupled with political uncertainty.
Schedule banks have geared-up their lending activities taking advantage of an apparent relative political clam in 2014 resulting in significant growth in overall bank lending, they added.
As on December 2014, the banking sectors’ lending stood at Tk 5, 28,755 crore which was Tk 4, 63,871 crore in 2013. That means, the overall lending has increased by Tk 64,884 crore just in a period of one year.
At the same time, the deposit collection by the banks has witnessed a 13.26 per cent growth last year which was 16.26 per cent the previous year (2013).
All the banks have mobilized Tk 7, 10,473 crore deposit in 2014 compared with Tk 6, 27,296 crore in 2013.
“A stable political environment helped the bank lending grow significantly in 2014. Banks have offered rate cuts which also largely influenced overall bank lending,” M Mahfuzur Rahman, an Executive Director of BB told The New Nation on Monday.
He said that the banking sector had started recovering from the lending crisis struck in 2013 in the wake of political turmoil centering the election.
The BB data showed that the deposit growth in state-owned commercial banks has marked an increase of 11.78 per cent whereas their loan growth was recorded at 8.36 per cent in 2014.
In the specialized banks, the deposit growth was 20.22 per cent and lending growth was 19.9 per cent. The deposit growth in the private sectors’ commercial banks was 15.52 per cent and lending growth was 17.51 per cent.
The deposit and lending growth, however entered in negative territory during the year, marking -1.47 and -2.55 per cent respectively.
BB officials said that bank lending was higher during the second half of last year from that of the first half of the year 2014.
“Banks did not show much interest in providing fresh loans to corporate houses and business entities during the first half of the last year fearing fresh political unrest leading to sluggish lending growth. Such a trend also helped piling up huge excess liquidity in the banking industry,” said another senior BB official.
He added most of the banks stepped up their efforts to accelerate lending activities during the second half of the same year by cutting lending rates. This has created a greater credit demands from the businesses and helped boost bank lending.
When asked, he said, challenges remain for banks as the country has already plunged into deep political crisis again. “If the situation prolongs, all kinds of commercial lending by banks will mark significant fall in the current year,” he added.
