Private credit growth up for 7th straight month

Private sector credit growth in Bangladesh accelerated to 10.68 per cent in December rising for the seventh consecutive month as the economy rebounds from the coronavirus pandemic.

Analysts call the double-digit growth a good sign for the economy as the upward trend came in the face of the third wave of infections.

The credit growth, which had faced sluggishness right after the coronavirus arrived on the shores of Bangladesh in March 2020 as demand plunged, stood at 10.11 per cent in November.

The growth stood at 8.29 per cent in April and 7.55 per cent in May. The credit expansion has been rising since then, data from the Bangladesh Bank showed.

Md Arfan Ali, managing director of Bank Asia, says that export earnings are on the increase, which has given a boost to the import financing.

"The post import financing has played a positive role in pushing up the credit growth."

He says people are now less fearful about the virus compared to the previous waves, keeping the economy vibrant. Businesses are now taking up loans to set up new industrial units.

Ali hopes that the central bank may achieve its credit growth target this fiscal year.

The BB has set a private sector credit growth target of 14.8 per cent for the current fiscal year ending in June. It missed its goal in the last fiscal year after the growth plunged to 8.35 per cent against the goal of 14.8 per cent. 

"The ongoing credit growth will continue if no major obstacle emerges."

Emranul Huq, managing director of Dhaka Bank, says a majority of banks usually try to use their unutilised funds in December by giving out loans before the year closes.

Banks also followed the same path last month, lifting the credit growth.