Disbursement of industrial term loan declined by nearly 4.0 per cent in the first nine months of the current fiscal year (FY) amid a substantial rise in overall industrial lending.
Such a lower disbursement of term lending has been attributed to the prevailing political uncertainty and inadequate supply of power and natural gas.
"Disbursement of industrial term loan fell slightly during the period under review as entrepreneurs are still maintaining a 'go-slow' policy to avoid financial risks," Masum Patwary, general manager of the SME and Special Programmes Department of the Bangladesh Bank (BB) told the FE Sunday.
The disbursement of industrial term loan came down to Tk 308.49 billion in the July-March period of the FY 14 from Tk 320.15 billion in the corresponding period of the previous fiscal.
"We expect that the industrial term loan disbursement will increase in the coming months as the political situation has been improving gradually," Mr Patwary noted.
Talking to the FE, a senior official of a leading private commercial bank said inadequate supply of gas and power has also discouraged entrepreneurs to expand their businesses through setting up of new industries.
"The demand for industrial term loan is still low as most of businessmen are following a wait-and-see policy to avoid financial risks," the private banker explained.
He also said the businesses are yet to be confident enough about the political stability in Bangladesh while making their investment decisions.
"But the disbursement of industrial term loan may increase in the near future if the government announces a business-friendly budget next month," the banker noted.
On the other hand, disbursement of working capital for industries increased by 18.69 per cent to Tk 915.08 billion in the first nine months of the FY 14 from Tk 770.99 billion in the same period of the FY 13.
"The disbursement of working capital recorded a hefty growth during the period under review following rising trend in credit flow to the small and medium enterprises (SME)," another BB official explained.
The disbursement of SME loan increased by nearly 9.0 per cent to Tk 210.53 billion in the January-March period of the current calendar year from Tk 193.52 billion in the corresponding period of the previous year, the BB data showed.
However, overall industrial credit disbursement rose by 12.14 per cent to Tk 1223.57 billion in the July-March period of the FY 14 from Tk 1091.14 billion in the same period of the FY 13.
The estimate includes disbursement of fresh credit, rescheduling of term loans and fund release for balancing, modernisation, rehabilitation and expansion (BMRE) of industrial units.
The power, telecommunications, pharmaceuticals, textile and transportation sectors received the lion's share of the credit, according to the bankers.
The recovery of industrial loan increased by 28 per cent during the period under review, as banks and non-banking financial institutions (NBFIs) intensified their recovery drives in line with the central bank directives.
The industrial credit recovery rose to Tk 1,142.54 billion in the first nine months of the FY 14 from Tk 892.60 billion in the corresponding period of the previous fiscal.
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