Latest Economic Update of Bangladesh

The current Bangladesh Economic Update focuses that the present situation of banking sector has been deteriorating in terms of growth of credit and disbursement and risk management. Besides this backdrop, questions are being raised concerning the far-sighted deregulation of the financial sector. Growth in investment exerts impact on the growth in GDP. The decline in the growth in credit illustrates the poor
condition of investment which might drag down the current growth in GDP. For example, the government requires investment rate to rise at 32.0 percent of GDP for achievement of 7.2 percent rate of
growth in GDP in FY 2013-14, Some long term issues have been persisting in the banking sector. Growth of credit in private sector registered at 11.07 percent in September 2013 over September 2012, and it was lower than the growth of 19.88 percent witnessed at the same period in the previous year. Growth of credit in public sector has observed a negative rate of growth of 43.15 percent in July-September, 2013-14 over July-September, 2012-13, which also grew at a negative rate of 4.95 percent over July-September, 2011-12. Low level of demand for credits by the private sector is manifested in the increasing situation of liquidity of the banking sector. 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. Furthermore, the loan-deposit ratio (LDR) has been on a declining trend for
the past one year. In September 2013, LDR of the banking business stood at 71.65 percent, meaning that a bank has lent Tk. 71.65 against a deposit of Tk. 100. This ratio was 77.85 percent in the same period of the previous year. Growth of credit in both industry and agriculture has declined. The disbursement of industrial term loan stood Tk. 8880.79 crore in the first quarter of the current FY 2013-14, which is
the lowest among the last five quarters. This amount was Tk.