Half Yearly Monetary Policy Soon
Pvt sector credit growth fell short in Jan-June
The first half yearly (H1) Monetary Policy Statement (MPS) covering July to December period of 2019-20 is scheduled to unveiled by the end of this month in the backdrop of the missed private sector credit target for second half (H2) in previous policy statement from January to June this year.
The central bank in the second half yearly (H1) monetary policy of FY19 had set private sector credit growth at 16.5 per cent but as per BB latest statistics till May the credit growth in private sector was 11.3 per cent while the domestics grew at 12 per cent against the set target of 15.9 per cent.
Broad money growth limit for the H2 of the last fiscal was 12 per cent aiming to support small and medium enterprises and help the government in achieving sustainable development goals. It also aimed to control inflationary pressure but the growth fell drastically.
While unveiling the H2 monetary policy in January 2019 it was calculated that after the national election that was held on December 30 last year the private sector credit will get momentum but it didn't happen till May this year.
A senior BB official said, "We are working for the upcoming monetary policy and it would be unveiled at later of the current month." He said, "We have already talked with different stakeholders, economists and other experts on upcoming policy and got their suggestions."
The central bank official hinted that as private sector credit didn't grow as per existing MPS, it is unlikely to raise the limit. He said, "We are studying the market force and inflation is another factor that should be in our mind in framing the H1FY20 MPS."
Anis A Khan, Managing Director of the Mutual Trust Bank (MTB) while talking with the Daily Observer said due to liquidity crisis credit growth didn't happen as per target growth. He said due to lower growth in deposits and at the government's higher bank borrowing, the banks' lending capability to privates sector is on decline.
Mr Khan also immediate past chairman of the Association of Bankers Bangladesh said as the government's borrowing is increasing and banks need liquidity for lending, it is necessary to increase the Advance Deposit Ration (ADR) in the upcoming monetary policy to 85 per cent though the banks are currently enjoying the limit as per extension till September this year.