It stood at 8.79%, down from 8.93% in February
Private sector credit growth slightly fell in March from the previous months as the second wave of the Covid-19 pandemic continues to take its toll on the economy.
In March, private sector credit growth stood at 8.79%, down from 8.93% in February, according to data from Bangladesh Bank.
The growth in February started to rise but it fell again in March as the second wave of the Covid-19 pandemic further affected the country's businesses and economy.
As coronavirus cases continued to rise alarmingly since mid-March, the government imposed a nationwide lockdown for a week from April 5 to contain the surge. Later, a stricter lockdown was declared from April 14 to 21 which was later extended till May 5.
The credit growth has been hovering around the 8% mark for a few months as businesses remain apprehensive about making fresh investments amid the pandemic.
The March figure is 6.01 percentage points lower than the Bangladesh Bank’s target for this fiscal year.
Private sector credit growth started to increase from February centering Eid-ul-Fitr but it fell again owing to the ongoing stagnant situation of business and economy,” said Emranul Huq, managing director of Dhaka Bank.
He said that private sector credit growth may drop from the 8% mark in the upcoming days as the ongoing situation is yet to improve.
Between February and June last year, private sector credit growth consistently dropped when the global coronavirus pandemic was at its most ominous form.
From 9.2% in January, it came down to 8.6% in June last year as the lenders refrained from disbursing credit during the countrywide shutdown from March 26 to May 30.
“A large number of businesspeople are not showing their interest in expanding their businesses,” said AB Mirza Azizul Islam, a former adviser to a caretaker government.
On the other hand, people’s incomes have eroded, which has resulted in weakened demand, he said, adding that businesses will not produce goods when the demand is dull.
Since demand is dull, businesses will neither enhance their capacity nor utilize their capacity in full, thus resulting in a decline in credit demand, Islam added.