The rising trend in private sector credit growth continued until December last but bankers feared a declining trend in the next months due to the ongoing political turmoil.

They have also predicted that the credit growth in the private sector might see a downward trend in January last after showing a rising trend over the last few months.

The sector's credit growth rose to 13.50 per cent in December, 2014 on a year-on-year basis from 12.67 per cent in November last. It was 12.12 per cent in October last.

"The private sector credit growth may fall slightly in the month of January mainly due to the lack of investment-friendly environment," Mizanur Rahman, managing director and chief   executive officer (CEO), the Modhumoti Bank Limited told the FE Monday.

The senior banker also said the demand for fresh credit is falling because most businessmen have maintained a 'go-slow' policy to avoid financial risk.

Private sector credit growth increased in December last because of rising demand for trade financing along with higher imports of capital machinery, a senior official of a leading private commercial bank explained.

"The credit demand had picked up during the period under review accelerating the economic activities gradually after a prolonged political gridlock in 2013," the private banker noted.

The total outstanding loans of private sector stood at Tk 5,434.07 billion as of December, 2014 against Tk 4,787.67 billion in the corresponding period of the previous year. It was Tk 4,328.92 billion in December, 2012.

Last December's private credit growth was slightly lower than the target, set by the Bangladesh Bank (BB) earlier.

The central bank earlier set the ceiling for private sector credit growth at 16.5 per cent including foreign borrowing while 14 per cent from local sources for the July-December period of the current fiscal year (FY) 2014-15.

The ceiling for private sector credit growth remained unchanged at 15.5 per cent for the second half of the FY '15 while public sector including the government re-fixed it at 25.3 per cent from 24.8 per cent earlier, according to the current monetary policy statement (MPS).

"We're trying to reduce the interest rate spread aiming to boost investment, particularly in productive sectors," a BB senior official told the FE.

He also said the central bank is ready to increase the ceiling of private sector credit growth in line with requirement.

The country's imports grew by more than 10 per cent in the first half (H1) of the FY '15, due mainly to higher import of capital machinery.

The actual import in terms of settlement of letters of credit (LCs) grew by 10.08 per cent to US$19.59 billion during the July-December period of FY '15 from $17.80 billion in the corresponding period of the previous fiscal.

On the other hand, opening of LCs, generally known as import orders, rose by 13.16 per cent to $21.28 billion in the H1 of FY '15 from $18.81 billion in the same period of FY '14.