Raising credit to pvt sector BB’s prime challenge

Monirul Alam of DOT
The prime challenge of Bangladesh Bank’s monetary policy is to increase credit flow to the private sector during the remaining periods of current financial year (FY), from January to June 2019, insiders observed yesterday.
This challenge emerged out of the sluggish credit growth to private sector — 5.65 percent of six month average only against target of 16.80 percent — during the fast half (July-December 2018) of the current FY.
The Bangladesh Bank (BB) is currently finalizing its preparation to announce the Monetary Policy Statement (MPS) later next week for the second half of the ongoing fiscal.
The monetary authority of a country, commonly Central Bank enacts the MPS that envisage guidelines for banks showing process of controls either the cost of very short-term borrowing or the monetary base, often targeting an interest rate or inflation rate to ensure price stability and general trust in the currency.
The central bank insiders said that banks could not reduce lending rates to single digit that resulted to the sluggish growth of credit to private sector. They also said that political uncertainty over the Parliamentary Polls 2018 has contributed partly to the poor credit growth.
“Despite the BB’s continue persuasion, banks have been failed to reduce lending rate to single digit. Therefore, raising credit to private sector is challenging,” said a BB high official, seeking anonymity, yesterday.