Industrial term loans registered a steep rise in the first quarter (Q1) of this fiscal year (FY) principally due to higher lending on account of import of capital machinery, officials said.
The disbursement of such credits increased 44.24 per cent to Tk 128.09 billion in the July-September period of FY 2014 over the corresponding previous period.
According to central bank statistics, the total amount of industrial term loans was Tk 88.81 billion in the past fiscal (2013-14).
"The disbursement of industrial term loans increased significantly during the period under review because of higher import of capital machinery," Masum Patwary, general manager of the SME and Special Programmes Department of Bangladesh Bank (BB), told the FE Monday.
The import of capital machinery or industrial equipment used for production rose by 22.03 per cent to $691.36 million in the Q1 of the FY 15 against $566.54 million of the corresponding period of the previous fiscal.
Talking to the FE, another BB official said higher import for power and energy, food processing, steel and engineering industries contributed to the rise in overall capital machinery imports during the period under review.
Besides, disbursement of working capital for industries increased by 62.39 per cent to Tk 392.35 billion in the Q1 of the FY 15 from Tk 241.61 billion, the BB data showed.
However, the disbursement of overall industrial loans shot up by 57.51 per cent to Tk 520.45 billion during the period from Tk 330.41 billion in the same period of the FY 14.
The estimate includes disbursement of fresh credits, the rescheduling of term loans and fund release for balancing, modernisation, rehabilitation and expansion (BMRE) of industrial units.
"The credit demand for industrial purposes has increased recently for accelerating the overall economic activities gradually after a long-term political gridlock last year," Mr. Patwary said to explain the surge in lending to industries.
He also said the upward trend of overall industrial loan disbursement may continue in the coming months if the political stability continues.
The recovery of overall industrial loans also found a significant increase in the Q1 of the FY 15 following intensified recovery drives by the banks and non-bank financial institutions (NBFIs) in line with the BB instructions
The recovery increase was 27.31 per cent in the quarter. The overall industrial credit recovery amounted to Tk 412.41 billion during the period against Tk 323.94 billion in the FY 14.
Echoing the BB official's views, a senior private banker said the uptrend in industrial loan disbursement would continue in the near future if the confidence of entrepreneurs got restored fully.
"The flow of industrial loans would increase in the coming months if the government ensured better supply of gas and electricity to the industrial units," he said.
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