The private sector credit distribution has got a lackluster pace in the month of May just a month ahead of new monetary policy of Bangladesh Bank.
Accrodng to the insiders in the banking sector, businesses are hungry for loan but the commercial banks cannot meet the demand for required loan as they have not enough deposit.Amid such a situation, pressure is mounting on the central bank to extend the deadline for banks to adjust their advance-deposit ratio (ADR).
Replying to a query, economic adviser of Bangladesh Bank Dr Md Akhtaruzzaman told daily sun the central bank is working to bring dynamism to private sector credit.
But what measures will be taken to increase the credit growth cannot be said right now, he added.
Earlier, the central bank extended the deadline four times in response to the demand of the commercial banks.
During the last ADR extension, the central bank’s spokesman Serajul Islam said the deadline was extended again for banks due to their application.
A few banks will take more time to lower the advance-deposit ratio and they are trying to lower their advance-deposit ratio, he added.However, the amount of loan distributed by the banks at the end of May (May 2018 to May 2019) stood at Tk10,00,868 crore. The amount of private sector loan amount was Tk8,92,403 crore.
As a result, in the last one year, the private sector loan increased to Tk108515 crore.
The central bank data says banks cannot get deposit by raising interest rates. In the first three months of this year (January-March), the deposits increased only by Tk4017 crore. But at the same time the National Savings Certificate worth around Tk15000 crore had been sold despite the government strong stance on the sale of the certificate.
According to the instructions of Bangladesh Bank, the commercial banks can give loan a maximum of Tk83.5 against the deposit of Tk100.
Banks following Islami banking rule can provide loans up to Tk89 against Tk100 deposit. However, several banks distributed loan according to Tk100-Tk100 ratio. Some banks have disbursed loan of Tk105 for a sum of deposit of Tk100.
The central bank’s latest data shows till June 30 that the target of raising private sector loan was 16.55 percent while private sector credit growth in the last 12 months was 12.16 percent.
The amount of deposit in the banking sector stood at Tk1023206 crore at the end of March.
According to the central bank report, banks liquidity decreased in March 2019 compared to March 2018.