Demand for letters of credit (L/Cs) is underlining substantial growth in private sector credit in Bangladesh.

Credit extended to privately owned businesses sector grew by 17.8 per cent in September, a continuation of high growth rates recorded in the last few months due to increased demand for credit from the business community.

L/C trend

Settlement of L/Cs reached US$11.82 billion in the three months to September, up 1.89 per cent from a year earlier, according to data from the Bangladesh Bank (BB).

Banks have until recently maintained a cautious approach to lending according to the managing director of Bank Asia, Mohammed Arfan Ali, who says that the situation is now changed.

Typical projects

"Banks are now financing infrastructure projects initiated by the government and the private sector," he says.

According to managing director of Standard Bank, Mamun Ur Rashid, the majority of current lending is for large- and medium-scale industrial plants.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.