Private sector credit flow inches up in October

Private sectors credit flow increased by about 1 percentage point in October compared to the previous month, according to an updated Bangladesh Bank (BB) report.

The credit growth was 9.44 percent in October, up from 8.77 percent in September.

The central bank in its monetary policy announced in July this year set a target of 14.8 percent credit growth for fiscal year 2021-22.

According to the central bank, the total amount of loans disbursed by the banks to the private sector stood at Tk 12,19,537 crore at the end of October of the current fiscal year. It was Tk 11,14,322 crore in the corresponding month last year.

Bangladesh had been going through a decline in investment even before the pandemic hit the country’s economy, dragging along with it the private sector credit flow, one of the main indicators for an economy.

The emergence of Covid-19 in March last year pushed the credit flow even further down. It dropped down to 7.55 percent in May, the lowest in Bangladesh.

However, according to the BB, the growth of credit to the private sector saw a lift at 8.61 percent growth in June, the last month of the 2019-20 fiscal year.

In July, the first month of FY 2020-21, the growth increased to 9.20 percent riding on government incentive loans. It went on to grow even further to 9.36 percent in August and 9.48 percent in September.

Since October 2020, the credit flow had a mixed scenario, rising in one month, dropping in another. Then in May, it dropped to 7.55 percent — the lowest in the country.

In the last month of June of the last financial year, the country began to relax Covid-induced restrictions slightly increasing credit growth to 8.35 percent.

Since then, the flow of debt has been steadily increasing. In July and August, it was 8.38 percent and 8.42 percent, respectively.