Credit growth in Bangladesh’s banking sector slowed to 1.39% in the April-June quarter amid weak business activity linked to gas, power and fuel shortages, according to the report.

The combined loan outstanding of six state-owned banks fell by Tk3,572 crore, or 1.02%, to Tk3.48 lakh crore in June from Tk3.52 lakh crore in March.

Sonali Bank accounted for most of the decline, with its loan outstanding falling by Tk4,996 crore, or 5.49%, to Tk85,982 crore. Bank officials said Sonali is focusing more on recovering existing loans than issuing new ones, while investing a significant portion of deposits in government treasury bills and bonds.

Janata Bank’s loan outstanding also declined by Tk529 crore. The bank’s lending capacity has been constrained by a high level of non-performing loans.

In contrast, loan outstanding increased at Agrani Bank by Tk87 crore, Rupali Bank by Tk1,050 crore, BASIC Bank by Tk12 crore and Bangladesh Development Bank by Tk27 crore.

Specialised banks also recorded negative credit growth of 0.22% in the quarter, while private and foreign banks posted growth of 2.05% and 2.52%, respectively.