Classified loans in the industrial sector swelled by over 18 per cent or Tk 36.94 billion in the first quarter (Q1) of the current fiscal year (FY), proving the recovery drives by banks and financial institutions ineffective, to a great extent, officials said.
The non-performing loans (NPLs) in the industrial sector rose to Tk 239.97 billion at the end of the July-September quarter of FY 2016-17 from Tk 203.02 billion in the same period last year, according to the central bank's latest statistics.
The data show that large-scale industries hold higher volumes of NPLs than the minnows.
"We'll issue warning letters to the banks and non-banking financial institutions (NBFIs) which have a significant percentage NPLs out of their total industrial outstanding loans, asking them to expedite their recovery drives across the country," a senior official of the Bangladesh Bank (BB) told the FE Tuesday.
Total outstanding loans due from the industries increased by 20.15 per cent to Tk 3094.59 billion during the period under review from Tk 2575.71 billion in the same period of the FY'16
He also said the central bank had already expedited monitoring and supervision to ensure proper use of industrial credits.
Meanwhile, disbursement of the overall industrial credits, covering working capital and term loans, increased by nearly 16 per cent to Tk 624.39 billion during the period under review from Tk 539.85 billion in the same period of the previous FY.
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.
"Higher capital machinery imports have pushed up the disbursement of overall industrial loans during the period under review compared to the same period of the FY'16," the central banker explained.
The import of capital machinery or industrial equipment used for production jumped by more than 120 per cent or $987.85 million to $1.81 billion during the first three months of this fiscal against $820.51 million of the corresponding period.
The BB official also said the upward trend in the disbursement of industrial loans may continue in the coming months, too, as the central bank is encouraging the banks and NBFIs to expedite their credit flow to the productive sectors.
Senior bankers, however, said the power, telecommunications, pharmaceuticals, textile, garment and transportation sectors had received the lion's share of the bank money.
"The flow of industrial loans may increase further in the coming months if the government ensures better supply of gas and electricity to the industrial units," a senior official of a leading state-owned commercial bank (SoCB) told the FE.
On the other hand, the recovery of the overall industrial loans increased by more than 35 per cent to Tk 556.60 billion during the Q1 of the FY'17 from Tk 411.11 billion in the same period of the last fiscal, though the NPL share is meagre in it.
A leading SoCB could recover only 4.0 per cent of its burgeoning NPLs during the period, another central bank official said while explaining the poor recovery drives of the banks and NBFIs.
siddique.islam@gmail.com
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