Disbursement of industrial loans fell 9.93 per cent year-on-year to Tk 100,533.54 crore in the fourth quarter of last year owing to the economic meltdown created by the coronavirus pandemic.
Businesses and corporations take industrial loans to meet their short-term and long-term financial needs, such as funding capital expenditure and business expansion.
In the October-December quarter of last year, lenders disbursed 9.93 per cent lower to the industrial sector than during the same period of the previous year, according to the latest data by the Bangladesh Bank.
Lenders in the country generally disburse two types of loans to the industrial sector -- industrial term loans and industrial working capital loans.
Disbursement of industrial term loans contracted 31.84 per cent while industrial working capital loans fell 3.87 per cent in the fourth quarter of last year, as per the BB data.
This is a reflection of the stagnant economy due to the pandemic, said Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD).
There was hardly any industrial expansion, while many industries have put their production on halt in the face of suppressed demand amid the ongoing pandemic, she said.
“This was the reason for the falling trend of industrial loans,” Khatun added.
But it was a good sign that the recovery of industrial loans registered a positive growth owing to the voluntary repayment by some good borrowers and loans rescheduled by lenders.
Banks rescheduled about Tk 13,457.8 crore of defaulted loans in 2020, according to data by the central bank.
Industrial loan recovery rose only 3.68 per cent to Tk 92,716.63 crore in the quarter.
Industries had gone into a shock when the government imposed the countrywide general shutdown on March 26 last year to flatten the curve of the coronavirus, Khatun said.
“Most of the industries are trying to survive amid the pandemic as the economic recovery has turned out to be wobbly,” she added.
The faltering import growth was the reflection of a meltdown in economy and business, said Dhaka Bank Managing Director Emranul Huq.
During the July to December period of the present fiscal year, import of capital machinery fell 37.58 per cent while import of industrial raw materials fell 3.33 per cent, according to BB data.
The future is also uncertain as the second wave of the deadly Covid-19 pandemic has hit the country, Huq added.
In the October-December quarter of last year, overdue industrial loans fell only 1.05 per cent to Tk 70,604.02 crore, while outstanding loans rose 4.56 per cent to Tk 572,352.29 crore owing to the loan moratorium facility offered by the central bank.
The BB has barred banks from downgrading any loan for the failure of borrowers in paying instalments this year.
As a result, industrial defaulted loans did not rise so much. The defaulted loans in the sector rose only 0.64 per cent year-on-year to Tk 45,414.94 crore at the end of December last year.
All kinds of borrowers will get three more months till June 30 this year to repay their loans as the central bank on March 24 extended several facilities for repayment of loans once the second wave of the Covid-19 pandemic hit the country.
The working capital loans, whose repayment periods have already expired, will be treated as regular loans till June 30 next year if the borrowers pay their unpaid interests every quarter, as per a recent BB notice.
The interest of the working capital loans of last year, the repayment periods of which have already expired, can be paid within June 2022 in six quarterly instalments.
Borrowers of demand loans will be able to repay their loans in eight quarterly instalments from March this year to December 2022.
The lenders cannot downgrade the loans if borrowers have paid their quarterly instalments, the BB said.