Private sector credit growth inches up to 9.96pc in Feb

Business Report :
Private sector credit growth slightly increased to 9.96% in February, edging up by 0.01 basis points from January, amid Bangladesh Bank’s contractionary monetary policy that keeps interest rates higher to diminish the loan appetite for businesses.

Bangladesh Bank data shows that private credit growth was 9.95% in January.

The rate was 10.13% in December 2023, the highest in six months.

Private credit stood at Tk15.77 lakh crore at the end of February 2024, up from Tk14.34 lakh crore at the end of February 2023.

The central bank has set a private credit growth target of 10% for the January-June period of the fiscal 2023-24.

But the growth was not within the central bank’s target in February.

Bankers say as the Bangladesh Bank has been sticking to a contractionary monetary policy since July 2023 and interest rates on loans to customers are increasing every month.

The cost of funds for banks has increased as the policy rate has been increased several times, leading to a decrease in private sector credit growth, they say.

They say several banks in the country have been facing a liquidity crisis for the past year. Due to their own liquidity crisis, these banks have reduced loan disbursement to customers, they say.