The lowering of the private sector credit growth target for fiscal 2019-20 will affect the industrial production and employment generation, the International Business Forum of Bangladesh (IBF-B) commented on the latest Monetary Policy Statement yesterday. The government has set the private sector credit growth target at 13.2 percent for the July to December period of 2019-20 and 14.8 percent for the full year against 16.5 percent growth target set for 2018-19. Achieving 8.20 percent GDP growth in the ongoing fiscal year will be difficult with such a reduction in the private sector credit growth target, the IBFB said in a statement.
Moreover, the targeted loan from savings certificates will shrink the deposit base of banks and leave an impact on loan for the private sector, it said.
Bangladesh Bank’s plan to open market operation activities at an interest rate-based monetary policy instead of the current monetary aggregate-based policy will have a direct impact on interest rates, according to the statement. The finance minister has recently declared that BB is going to issue policy to cap the interest rate of 6 percent on deposit and 9 percent on bank loan, which contradicts with the declared monetary policy, the forum said. However, the banking regulator proposes bringing the informal economic activities into formal sector through introducing ICT-based transaction, which is a good initiative, the IBFB said.
Source: The Daily Star, 08.08.2019