A file photo shows construction workers working at a site in Dhaka. The credit growth in private sector fell further in April due mainly to the declining trend of industrial loan disbursement and overall import payment. — New Age photo

The credit growth in private sector fell further in April due mainly to the declining trend of industrial loan disbursement and overall import payment that affected the growth of the country’s gross domestic products, said BB officials and economists.
According to the latest BB data, the private sector in April borrowed Tk 3,90,663.8 crore, which was 18.22 per cent higher than that of the same month of the last financial year when the borrowing was Tk 3,30460.7 crore.
A BB official told New Age that the credit growth in private sector declined almost in every month in the current financial year due to the contractionay monetary policy taken by the central bank.
The credit growth in July reached 24.36 per cent, in August 23.19 per cent, in September 21.97 per cent, in October 21.46 per cent, in November 19.33, in December 19.39 per cent, in January 18.94 per cent, in February 19.55 per cent and in March 19.45 per cent, according to BB data.
Former Bangladesh Bank governor Salehuddin Ahmed said the declining trend of credit growth in private sector had already impeded the GDP growth, as the private sector was deprived of getting loans from the banking system.
He said, ‘A stagnant situation has emerged in investment of the private sector. As a result, employment generation is at stake.’
He said the BB had taken the contractionary monetary policy in a bid to reduce the inflation, but the measure could not achieve much success.
On the other hand, the government’s bank borrowing is yet to reach at a satisfactory level, he said.
The BB official said the growth in industrial credit disbursement fell sharply in the first nine months of the current financial year compared to that of the corresponding period of the FY2010-11 due mainly to the contractionary monetary policy.
Disbursement of industrial loans by banks and non-bank financial institutions grew by 4.55 per cent in July-March of this financial year whereas the loan disbursement rose by 27.07 per cent in the same period of the previous financial year, BB data showed.
He said, ‘The declining trend of the loan disbursement will continue till June if the BB does not take another contractionary monetary policy for the next months.’
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 sectors.
Under the monetary programme, credit growth rate to the public, including government sector and private sectors, 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.
Another BB official said the commercial banks had been facing liquidity crisis and shortage of US dollar for the last few months. As a result, the banks were not interested to open LCs for less important products like consumer items and luxurious goods in line with the central bank’s direction, he explained. 
The country’s import bill payment in April of the current financial year grew by 4.59 per cent compared to that of the same period of the FY2010-11 when import payment had grown by 23.48 per cent year-on-year, showed BB data.
Under the circumstances, the declining trend of the import payment played a significant role to reduce the credit growth in private sector, he said. 
The public sector in April had borrowed Tk 1,08,872.1 crore, which was 32.37 per cent higher compared with that of the same month of the previous year.