Credit rollout by local private banks grew at a faster rate than foreign and state-run lenders last fiscal year due to their aggressive push for more profit.
The private banks, whose share in total credit stands at 71.91 percent, saw their credit grow 15.65 percent year-on-year in fiscal 2014-15.
State-owned and foreign banks, which together account for 24.64 percent of total loans, saw their year-on-year credit growth turn positive, according to data from the central bank.
In fiscal 2014-15, credit disbursement by state-owned commercial banks increased 6.95 percent and that by foreign banks 2.47 percent.
Four state-owned specialised banks registered 4.44 percent growth year-on-year in fiscal 2014-15.
Although the pace of credit disbursement by the three categories of commercial banks slowed down, their disbursement situation improved compared to the previous year.
At the end of June, total credit stood at Tk 553,396.78 crore, with almost half of it being industrial credit that comprises working capital and term-loans. The amount is 12.66 percent higher from a year earlier.
MA Halim Chowdhury, managing director of Pubali Bank, said credit disbursement by private commercial banks increased at the end of the year because of higher loan disbursement to the SME sector in the suburban areas through non-governmental organisations.
The suburban branches of the banks disbursed lots of loans to small entrepreneurs, although they could not give loans to big entrepreneurs in the urban areas, he added.
SME loans grew 16 percent in March this year, according to central bank statistics.
Golam Hafiz Ahmed, managing director of NCC Bank, said credit disbursement by the private commercial banks increased mainly due to a big push at the end of the year. “After all, we have to pay higher dividends to our shareholders.”
The big corporate houses have distributors all over the country and the private commercial banks gave loans to those companies as SME loans.
Credit from private commercial banks increased in the power, textiles and garment sectors, according to the NCC Bank chief.
Also, people meet a lot of their demands through credit cards, due to which the private banks' consumer loans increased significantly, Ahmed added. The target for private credit growth for fiscal 2014-15 was 15.5 percent but it grew at 13.19 percent.
Many of the big companies have been borrowing from foreign sources, due to which credit growth of the domestic banks has declined, Chowdhury said.
The reduction in prices of petroleum products and other basic commodities is another reason for the low demand for credit, according to Ahmed of NCC Bank.
A senior official of Sonali Bank said a good amount of the bank's credit goes to Bangladesh Petroleum Corporation and Bangladesh Chemical Industries Corporation for importing petroleum products and fertilisers every year.
But this year, the demand for credit from them is low and hence the low growth figures, he said.
The state banks are very cautious now due to previous financial scams at banks, said an official of state-owned Agrani Bank.
These banks are slow in loan disbursement, he also said.
Both Chowdhury and Ahmed said the interest rate declined to less than 12 percent. However, in case of good borrowers the rate is 10 percent, they said.
They are hopeful that this year's private sector credit growth target of 15 percent would be achieved, provided there is a stable political situation