Private sector credit growth has dropped to a 37-month low of 14.01 percent in November as banks had adopted a “cautious approach” to disburse loans ahead of the Dec 30 national election to comply with the central bank's instruction on the loan-deposit ratio.

This growth was a 5 percentage point less than that of 19 percent at beginning of the current fiscal year.

In November 2015, private sector credit growth dropped to 13.72 percent, which continued to rise till the beginning of 2018 when the growth reached 19 percent.

Then the credit growth witnessed slight ups and downs, according to data from Bangladesh Bank.

In continuation of the changing trend, the growth stood at 14.72 percent in October from 14.67 percent in September of the current fiscal.

Keeping the 11th Parliamentary Election ahead, the central bank's decision to slash the loan-deposit ratio by 1.5 percentage points to 83.5 percent cut the credit growth, banks chiefs and analysts told Bangla Tribune.

On Jan 30, 2018, the central bank instructed banks to implement the new ratio by March 2019.

According to banks chiefs and analysts, less number of entrepreneurs also launched their ventures last year as the country had been preparing to go on the polls, which was held on Dec 30, 2018.

Agrani Bank chairman Zaid Bakht told Bangla Tribune, “Many businesses might not go on production due to the 2018 election.

“So, investment, as well as banks’ credit growth, slightly dropped,” said Bakht, who is the research director of Bangladesh Institute of Development Studies.

As of November 2018, banks’ private sector credit was over Tk 9.83 trillion with a year-on-year growth of around 14 percent.

Several factors made the credit growth decline including bank’s move to cut down the lending rate to a single digit coupled with entrepreneurs’ less investment due to the national polls, said Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh, a platform of private banks' managing directors.

Besides banks have adopted the “cautious approach” to disburse loans while several others refrained from lending money in a bid adjusting the adjusting advance deposit ratio, said Rahman, who is the managing director of Dhaka Bank.