What is Credit Situation of Monetary Policy

The target of credit in private sector in the current MPS (Monetary Policy Statement) has been set at 15.5 percent by December 2013. This target is 3.0 percentage points less than the target (18.5 percent) of previous monetary policy statement. The target of MTMF in domestic credit and credit in private sectors were based on contractionary mode.
 The rate of growth of actual disbursement of credit to the private sector in July to September of 2013-14 over July to September of 2012-13 are 10.18 percent, representing a gap of 5.32 percentage point. If the current trend continues, the gap may further widen in September to December, 2013-14 and the rate of growth of credit in private sector might decline from 2.21 percent in July-September, 2013 to 1.98 percent in October-December, 2013.

It has been observed a negative rate of growth of 43.15 percent in public sector 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. Domestic credit recorded an increase of 11.52 percent at the end of September, 2013 against the increase of 17.72 percent in corresponding period of the last year.

Excess of liquidity in the banking sector has been increasing over the months mainly due to a noticeably low level of demand for credit by the private sector. Excess of liquidity of the banking sector reached over Tk. 83000 crore at the end of November 2013 whereas this was Tk. 80000 crore in July, 2013.