A file photo shows activities inside a branch of a private bank in the city. The credit growth in January in both public and private sector fell slightly with the central bank maintaining restriction on money flow to curb inflation. — New Age photo

The credit growth in January in both public and private sector fell slightly with the central bank maintaining restriction on money flow to curb inflation.
But Bangladesh Bank officials said the slight fall was not at optimum level set by the central bank at its current monetary policy.
In its latest half-yearly monetary policy for January-June, 2012 BB stated that it would aim at containing inflationary pressures through discouraging credit flow to public and private sector.
Under the new monetary programme, credit growth rate to the public, including government sector, and private sector will be limited to 31 per cent and 16 per cent respectively by the end of June 2012 from 62 per cent and 18 per cent at the end of December, 2011.
BB data showed that the private sector had borrowed Tk 3,74,855.6 crore in January, which was 18.94 per cent higher than the borrowing of the same month of the last financial year. 
However, the private sector credit growth in December 2011 was 19.39 per cent higher than that of the same period of the previous financial year.
Particularly the government sector in the month borrowed Tk 89,019.1 crore, which was 62.41 per cent higher compared to that of January 2011.
The public including government sector credit growth in January stood at 43.20 per cent. It was 54.39 per cent higher in December 2011 from that in the same month of last year.
A BB official told New Age that the particularly government borrowing from the banking channel had not curbed yet now. Actually the public sector without government arena maintained a negative growth in the period.
As a result the overall credit growth in the public sector declined in January, but it was still high, he said.
He said that the public sector credit growth might decrease in the coming months as the central bank had not given any money to commercial banks through repurchase agreement since December 22 2011, virtually forcing the cash-strapped banks to take fund at higher interest rate through the central bank’s special Repo.
The interest rate of Repo, through which BB sells money to banks for short time, is 7.75 per cent while the current interest rate of special Repo is 10.75 per cent, he said.
Another BB official said that the country’s double digit point-to-point inflation rate had persisted in the last several months mainly because of prevailing high credit growth in both public and private sector.
BB has taken the contractionary monetary policy for January-June, 2012 to curb the high inflation rate, he said.
According to data released by the Bangladesh Bureau of Statistics in February, the point-to-point inflation rate in January was 11.59 per cent.
The point-to-point basis inflation rate has been in double digit since March last year. The point-to-point inflation rate in January was also the highest in the last four months as it was 11.97 percentage point in September 2011.
The high inflation rate will persist in the coming months if the credit growth is not controlled by BB, he said.