Growth of credit in Private and Public Sector

Growth of credit in private sector has been declining over the years after October-December, 2012 and projection says that in the first quarter of the 2013, and in the last quarter of the 2014 rate of growth of credit in private sector might decline from 2.21 percent in July-September, 2013 to 1.98 percent in
October-December, 2013. At the end of September 2013, total liquid assets stood Tk.182439.61 crore
compared to Tk. 174171.33 crore at the end of June 2013. Excess of liquidity of the banking business reached over Tk. 83000 crore at the end of November 2013 whereas this was Tk. 80000 crore in July, 2013. Excess of liquidity of the banking sector has been increasing over the months mainlydue to a noticeably low level of demand for credits by the private sector. Loan taking by the business community is seen because of decreasing trend for the forthcoming general election, consecutive contractionary monetary policy taken by Bangladesh Bank and long-persisting problems in supplying gas and power. At present, the economy has been suffering from regular strikes and blockades since beginning of the year.
Another reason behind the slow growth of credit is the rigid attitude in giving loans due to a number of scams occurred this year as well as mismatch between credit and deposit growth. If this situation continues, then economy might contract further. Growth of credit in private sector went down to 11 percent in fiscal year 2012-13 compared to nearly 20 percent in the previous fiscal year.