Industrial credit disbursement marks 24pc rise

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Siddique Islam Industrial credit disbursement recorded a significant rise by over 24 per cent in the last fiscal year (FY) against that of the previous fiscal, indicating an upward trend in investments amid the prevailing gas and power supply constraints. The disbursement of industrial term loans stood at Tk 321.63 billion in the fiscal year 2010-11 (FY11). A total of Tk 258.76 billion was disbursed in the previous fiscal, according to the central bank statistics. "It's indicating that it will have a positive impact on the country's overall economic growth," Senior Executive Director of the Bangladesh Bank (BB) Chowdhury Mohidul Haque told the FE Saturday. He also said the trend of term loan disbursement must be maintained for achieving the overall economic growth target by the end of this fiscal. "The disbursement of term loan particularly in big industries fell slightly in the last quarter of FY11 due mainly to credit-deposit ratio (CDR) adjustment by the banks," Mr Haque said while replying to a query. The credit flow to the big industries, officially known as large scale industries (LSI), came down to Tk 52.67 billion in April-June period of FY11 from Tk 53.16 billion of the previous quarter, the BB data showed. On February 20 last, the central bank set June 30 as deadline for bringing down the CDR of the commercial banks to a reasonable level. As per BB directives, 19 conventional commercial banks brought down their CDR to 85 per cent while five Sharia-based Islamic banks to 90 per cent within the stipulated timeframe. 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 central bank officials said. "The BMRE and capital machinery import have contributed to increased flow of credit to the industrial sectors," another BB official said. Import of capital machinery -- industrial equipment used for production -- was up by 40.20 per cent to $2.046 billion in FY11 as against $1.459 billion of the previous fiscal. "The upward trend of capital machinery imports will continue this fiscal if the government ensures adequate supplies of gas and power, particularly in the industrial units," the central banker added. The energy and power, telecommunications, pharmaceuticals, textile, housing, construction and transportation sectors have received the lion's share of the credit, a senior official of a leading private commercial bank said. "The flow of industrial credit will increase this fiscal year if the government ensures better supply of gas and electricity to the industrial units across the country," he added. The recovery of term loans increased by 31.78 per cent in FY11 as the banks and non-banking financial institutions (NBFIs) intensified their recovery drive in line with the central bank directives, the central bank officials said.