The growth of loans in the country’s private sector downed to 9.90 per cent declining 0.59 per cent in April of the current year compared to the previous month which is the lowest in the last five months. At the same time, it is 12 per cent less than in April of the last year.

Bankers said banks have invested in government securities due to a dull situation in the long-term investment. Businesses said banks don’t distribute regular loans and invest in high-interest-rate government bonds.   

The size of the securities market was Tk 5.50 lakh crore in the 2023-24 fiscal year. Of the amount, Tk 4.8 lakh crore was treasury bond and Tk 1.42 lakh crore was treasury bill. The investment in the securities market in the previous year was Tk 4.89 lakh crore.

According to the Bangladesh Bank, the growth of loans in the country’s private sector in April downed at 9.90 per cent which was 10.49 per cent during the same month of the last year. The loan growth in the private sector in April of 2023 was 11.28 per cent. The investment of the commercial banks in government securities during the 2023-24 fiscal increased by 7 per cent. Commercial banks have invested Tk 3.72 lakh crore in government securities during the last fiscal. Of the amount, Tk 2.51 lakh crore was in the treasury bond and Tk 1.21 lakh crore investment was in the treasury bill. The amount of the investment during the 2022-23 fiscal year was Tk 3.05 lakh crore. At the same time, the investment of the Bangladesh Bank in the securities declined 35 per cent. The share of the central bank in the securities market during the 2023-24 fiscal was Tk 84.90 thousand crore which was Tk 1.31 lakh crore in the 2022-23 fiscal year.    

Wishing anonymity, a managing director of a private bank said there is a slowdown in the demand for loans in the banking sector. For this reason, there is no pressure on liquidity. Investment in the infrastructure sector, post-import investment and offshore financing have declined recently alongside declining the demand for loans in the private sector. These trends have inspired the banks to invest in risk-free government securities.       

Bankers said the average deposit growth in the banks was 13 per cent while the average loan growth was only 6 per cent. Not only banks, big and mid-level depositors are also investing in government securities to get more than 11 per cent interest. Maximum good banks give interest of less than 10 per cent. The deposit growth in the banks was 11.04 per cent in December last year. In February, this growth declined to 10.43 per cent. In March, it downed to 9.99 per cent and in April the growth reached 8.63 per cent. However, the deposit growth increased slightly in May and reached 8.77 per cent which was 0.04 per cent less than May of the previous year.        

The central bank data said that in May of the current year, the deposit in the banking sector stands at 17 lakh 608 crore taka which was 16 lakh 81 thousand 939 crore taka in the same time of the last year. The deposit increased 18 thousand 669 crore taka.  

A business delegation led by Bangladesh Chamber of Industries (BCI) president Anwarul Alam Chowdhury Parvez recently met the Bangladesh Bank governor. During the meeting, the business leaders expressed concern about increasing investment in government securities.

Anwarul Alam Chowdhury Parvez said commercial banks are investing in government securities instead of regular loan activities. This trend will reduce the scope of getting loans in the private sector. The loan growth in the private sector is slowing down.   

@ The article was published on print and online versions of The Bangladesh Pratidin on July 14, 2024, and has been rewritten in English by Golam Rosul.