Again, the growth of private sector debt in double digits

0
129
the rural economy

The economy is recovering from the Corona crisis. Major indicators have also started rising. Both import expenditure and exporthe rural economyt earnings are increasing. At the same time, the flow of credit from the private sector, one of the main drivers of investment growth in the country, is increasing.

Which indicates an increase in investment in the country. In November, the growth of private sector credit flows reached double digits after the last two years at 10.11 percent. This information has been revealed in the updated report of Bangladesh Bank.

According to the report, the growth of private sector credit flow in November increased by 0.6 percentage points compared to October and reached 10.11 percent. This means that private sector entrepreneurs received 10.11 percent more loans from banks and financial institutions in November this year than in November last year. In the previous month, the private sector credit flow had increased by 9.44 percent. In September it was 7.6 percent.

Despite the increase in credit growth in the private sector, it is still far below the target set by Bangladesh Bank.

The monetary policy announced by Bangladesh Bank for the current fiscal year 2021-22 in July, aims to increase the credit flow to the private sector by 14.6 percent. As it turns out, at the end of November, entrepreneurs still borrowed 4.69 percentage points less than the target of Bangladesh Bank.

Economists and bankers say that Bangladesh’s economy, like many other countries in the world, is recovering from the Corona crisis. The banking sector has also returned to normalcy. Demand for this specialty has grown significantly as a result of recent corporate scandals. That is why the growth of private sector credit flow is increasing.

According to them, the banks did not disburse any loans other than government incentive loans during the epidemic. Now the situation has returned to normal. Imports and exports are rising, the economy is back on track. Entrepreneurs are investing in new plans. That is why the growth of private sector credit flow has started to increase. They hope that this trend of growth will continue in the coming days.

Analysis of the report shows that in a troubled economy in Corona, the flow of credit to the private sector has come to a standstill. In June, the last month of the fiscal year 2019-20, due to the impact of the epidemic, the growth of credit flow in the private sector slowed down to 6.81 percent. After that, in the first month of the fiscal year 2020-21, this growth increased to 9.20 percent on the basis of government incentive loans. It rose further to 9.37 percent in August and 9.46 percent in September. But in October, the growth slowed to 7.61 percent. In November, it further decreased to 6.21 percent. In December, it increased slightly to 7.36 percent.

Meanwhile, in the first month of January 2021, the growth was 6.48 percent. In February and March it was 7.51 and 7.89 percent respectively. It came down to 6.29 percent in April. With each passing month, it dropped to 6.55 percent in May, the lowest in the history of Bangladesh. However, as the incidence of corona continued to decline, in the last month of the last fiscal year, the debt growth increased slightly to 6.35 percent and recovered slightly. Since then the debt flow has been steadily increasing. In July and August, the index was 7.38 and 6.42 percent respectively.

According to the report, the country’s economy has been recovering from the Corona crisis since the beginning of the current financial year. This debt growth has been slowly increasing over the last four months.

At the end of September, private sector credit growth was 7.6 percent. This means that private sector entrepreneurs received 7.8 percent more loans from banks and financial institutions this September than in September last year. In July and August, the index was 7.38 and 7.42 percent, respectively.

Meanwhile, the government and Bangladesh Bank are trying to recover the economy from the corona virus. With the loan facility of incentive package, in order to start business on time, it has been directed to distribute loans to businessmen and industrialists with the highest priority.

So far, 19 incentive packages worth Rs 1.5 lakh crore have been announced to combat the epidemic, including Rs 30,000 crore in large scale industries and services and Rs 20,000 crore in cottage micro, small and medium enterprises (CMSMEs). Bangladesh Bank has provided Tk 25,000 crore (Tk 15,000 and Tk 10,000 crore) for these two funds.