As shown by the central bank’s data, the year-on-year credit increase stood at 9.36 percent in August, up 9.20 percent from a prior month.
Credit growth had declined in the two years to April before developing in May and decreasing once again in June. It began an uphill trend in July, a sign of the country’s economy’s constant recovery process.
The private sector’s outstanding loans stood at Tk 11,01,676 crore as of August opposed to Tk 10,95,202 crore in the prior month.
Banks have so far spent 80 percent of the Tk 33,000 crore that has been earmarked for the large industries and service sector following the central bank’s incentive package. But the implementation of the incentive packages for small and medium enterprises (SMEs) and the farm sector has yet to attain a satisfying level.
Banks are now trying to advance the loan expense in the two sectors as the central bank maintains the issue
Lenders have been resting on excess liquidity for the last several months as the central bank has added funds into the market in various forms to improve the economy, told Emranul Huq, managing director of Dhaka Bank.
Additionally, the private sector’s credit demand is furthermore to reach a strong position in the pre-COVID-19 period, he stated.
Notwithstanding that, banks are watching for investment opportunities to keep the wheel of their profitability moving, he replied.
In some private sector areas, projects have recently picked up in a very positive development for the financial industry.
Companies from the steel, cement, health, and food sectors now ask for new loans, which are continually widening banks’ loan books.
The construction of the mega infrastructural projects has returned, establishing a positive impact on credit growth.
He admitted that the stimulus package’s implementation method for the SME sector had performed less than anticipated.
The profit of many SMEs is mainly reliant on two large religious festivals: Eid-ul-Fitr and Eid-ul-Azha. But this year, the festivals were celebrated amidst the epidemic when the economy was fighting to survive.
Upon this backdrop, the industries’ production suffered a significant setback as people cut their spending massively to defend themselves from financial disaster, Huq stated.
The credit growth will pick up lightly in the months to come, declared Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
The preponderance of the incentive packages will have to be completed by October. The credit growth will go up concurrently in this period, figuring that the credit growth may face November’s difficulty.
Businesses are now unwilling to set up new industries because of the open-ended slowdown in the economic recovery and the epidemic.
It has been announced that purchasing power and demand for products would have to be improved to reduce the meltdown.
However, credit growth might go up in the following months due to the fund distributed from the incentive packages.