The country’s industrial term loans registered negative growth in the fiscal year 2013-14 due to sluggish business expansion activities in the backdrop of the then prolonged political unrest and increased inflow of foreign loans.
The loans disbursed by the banks and the non-bank financial institutions had registered 0.51% negative growth to Tk42,311 crore in the last fiscal year compared to 20.55% growth to Tk42,528 crore in the previous fiscal 2012-13, according to the central bank data.
The growth of the total industrial loan including working capital and term loans also down to half of the previous fiscal year.
The total industrial loan increased by 15.59% to Tk1,68,414 crore in the last fiscal year compared to 30.14% growth in the previous fiscal year.
The growth of the industrial term loan became negative as business expansion activities got almost stuck for the last one year due to sluggish investment climate, said Masum Patwary, General Manager of SME and Special Programmes Department under central bank.
Term loan has been falling sharply as big industries are now interested to take loan from the foreign sources because of the lower lending rates, Golam Hafiz Ahmed, Managing Director of NCC Bank, told the Dhaka Tribune.
The foreign loan inflow increased by 63% to $324m in the fiscal year 2012-13 compared to $198m in the fiscal year 2011-12, according to the Board of Investment Bangladesh.
As the central bank allowed foreign loans to put pressure on the commercial banks to reduce the lending rates, the decision had badly affected the business of local banks, he added.
Bangladesh Bank did not extend its credit growth target in the first half monetary policy of the fiscal year 2014-15 from immediate past policy taking the consideration of foreign loan inflow.
The central bank did not even expect that the local market won’t be flooded with the inflow of foreign loans in the current fiscal year, said a senior executive of Bangladesh Bank.
Against this backdrop, it kept its credit growth target unchanged at 16.5% fearing further possibility of slower credit demand from the industrial sector, he said.
The disbursement of industrial term loans through state-owned banks decreased by 75.65% to Tk1,393 crore in the last fiscal year compared to Tk5,723 crore in the previous fiscal year.
Private commercial banks disbursed industrial term loan worth Tk32,519 crore during last fiscal year, which was 13.23% higher than Tk28,719 crore in the previous fiscal year.
The industrial loan growth from the foreign banks decreased by 26.64% to Tk1,281 crore in the same period compared to Tk1,746 crore.
The country’s non-bank financial institutions posted 18.78% industrial loan growth to Tk5,800 crore in the last fiscal year from Tk4,882 crore in the previous fiscal year.
Banks put special focus on agriculture and consumer loans, instead of industrial loan, in last one year, to achieve credit target as per monetary policy, said a senior executive of Bangladesh Bank.
Classified loans in the industrial sector decreased by 2.10% to Tk15,225 crore in last fiscal year from 79% growth to Tk15,553 crore in the previous fiscal year due to the increase of payment as compared to the disbursement.
Classified loans decreased in the industrial sector due to huge loan rescheduling through taking advantage of the relaxed policy offered by the central bank, said Masum Patwary.
Of the total classified loans in the industrial sector, 5.47% declined against term loans and 4.53% rose against working capital loans, according to the central bank data.