Bangladesh's private sector credit growth drops 9.95%

Bangladesh Bank data revealed a decrease in private sector credit growth from 10.2 per cent in December to 9.95 per cent in January.

This downward trend continued from 9.9 per cent in November and 10.09 per cent in October 2023.

In response to these challenges, Bangladesh Bank adjusted the private sector credit growth target for January-June FY24 to 10 per cent, down from the previous 11 per cent.

The subdued growth is attributed to reduced interest from private sector investors, influenced by higher borrowing costs, global and domestic economic uncertainties, liquidity constraints within the banking sector, and a contractionary monetary policy.

Additionally, Bangladesh Bank’s continued foreign currency sales served as automatic quantitative tightening measures, significantly absorbing liquidity from the system.

Over the past 31 months, approximately $30 billion was sold from reserves, with significant allocations to banks in FY24, FY23, and FY22.

ALCHEMPro News Desk (DR)