Industrial loans amid the Ukraine-Russia war and liquidity crisis in the banking sector shot up over Tk100,000 crore last year due to increase in import cost of raw materials, capital equipment and low bank interest rates.
According to a Bangladesh Bank report, banks disbursed Tk531,000 crore in loans to the sector in 2022, while in 2021 the figure was Tk429,000 crore.
The amount increased by Tk101,321 crore.
The price of a dollar against the taka increased by at least 25% over the last year, due to which the overall industrial loans increased, insiders said.
Since August 2022, private sector credit growth has been slowing as imports dropped.
In February 2023, private sector credit growth was 12.14%, which was the lowest in 11 months.
While the private sector credit growth has declined, industrial sector credit growth increased.
According to the central bank report, the average price of eight essential commodities increased by -- coal 285%, petroleum 300%, iron and steel 20%, soybean 76%, wheat 63%, sugar 100%, fertilizer 75%, cotton 68% in January 2023 compared to January 2020. On average, the prices increased by 77%.
Total imports in FY21 and FY22 were $54.40 billion and $78.95 billion respectively.
Some 46% of the imports were essential goods which cost $23.05 billion in FY21, while the same amount of goods cost $44.25 billion in FY22, an additional cost of $19.25 billion due to increased prices.
The Bangladesh Bank data said they had to sell $7.67 billion in FY22.
Besides, the central bank had sold more than $11 billion in the current FY23.
As a result, additional import charges have increased and customers have spent more than Tk200,000 crore while paying more than $19 billion.
According to the industrial loan report, the total outstanding loan amount in the industrial sector is Tk730,000 crore.
Out of this, defaulted loans amount to 12.83%. However, as of December 2021, the sector's loan outstanding was Tk628,000 crore or 13.64%.
Insiders said that although industrial loans increased in 2022, it will decrease in 2023.
In the first 8 months of FY23, import LC openings decreased by nearly $14 billion compared to the same period of the previous fiscal year.
According to the central bank data, LCs worth $45.52 billion were opened during last July-February.
During the same period of the previous fiscal year, LCs worth $59.46 billion were opened, decreased by 23.45%.
