Private sector credit growth dropped significantly in December mainly due to the lower demand for loans, due mainly to the elections, bankers said.
They, however, expected the growth in credit flow to the private sector to pick up slightly in March as preparation for complying with the central bank's revised advance-deposit ratio (ADR) rules by some banks are underway.
The sector's credit growth came down to 13.20 per cent in December 2018 on a year-on-year basis from 14.01 per cent a month ago, according to the Bangladesh Bank (BB)'s latest statistics released on Thursday.
This growth was 3.60 percentage points lower than the BB's target of 16.8 per cent for the first half (H1) of the current fiscal year.
"Some banks are maintaining a 'go-slow' policy for loan disbursement as they are taking preparations to comply with the BB's revised ADR rules to be effective by March 2019," Mehmood Husain, managing director and chief executive officer (CEO) of NRB Bank Limited, told the FE.
The senior banker also said the credit growth to the private sector may maintain a modest growth upto March of the year.
"The credit growth to the private sector may rebound after March when banks comply with the central bank's revised ADR rules," Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), said, explaining possible credit growth trend in the near future.
Meanwhile, the total outstanding loans with the private sector rose to Tk 9,588.41 billion in December 2018 from Tk 8,470.90 billion a year ago. It was Tk 9,427.93 billion in November 2018.
Talking to the FE, a BB senior official said the amount of private sector credit increased but with a decreasing trend in recent months.
"We expect the private sector credit growth to increase slightly in the coming months because political uncertainty is over after the elections," the central banker said.
He added that the BB will give emphasis on ensuring the quality of credit through strengthening its monitoring and supervision.
Earlier, the central bank had extended the deadline by three more months to implement the revised limit of ADR by the banks.
The ADR has been re-fixed at 83.50 per cent for all the conventional banks and at 89 per cent for the Shariah-based Islami banks. The existing ratios are 85 per cent and 90 per cent respectively.