The volume of classified loans in the industrial sector increased by nearly 25 per cent in nine months of this fiscal year (FY) up to March last because of slower recovery drives by banks and financial institutions, officials said.
The non-performing loans (NPLs) of industrial sector rose to Tk 232.59 billion during the July-March period of FY 2015-16 from Tk 186.45 billion in the same period last year, according to the central bank's latest statistics.
The Bangladesh Bank (BB) has already issued warning letters to the banks and non-banking financial institutions (NBFIs), which have more than 10 per cent NPLs of their total industrial outstanding loans, asking them to expedite their recovery drives.
Total outstanding loans in the industrial sector increased by 23.55 per cent to Tk 2894.93 billion during the period under review from Tk 2343.08 billion in the same period of the FY 15.
"We've asked the banks and NBFIs to reduce the amount of classified loans in the industrial sector through strengthening their recovery drives across the country," executive director of the BB Nirmal Chandra Bhakta told the FE on Sunday.
He also said the central bank has already expedited monitoring and supervision to ensure proper use of industrial loans.
"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 previous fiscal," Mr Bhakta explained.
The import of capital machinery or industrial equipment used for productions rose by 12.55 per cent to US$2.51 billion during the nine months of this fiscal against $2.23 billion of the same period of the previous fiscal, the BB data showed.
Meanwhile, disbursement of the overall industrial credit covering working capital and term loans increased by more than 20 per cent to Tk 1914.50 billion during the period under review from Tk 1592.43 billion in the same period of the FY 15.
The estimate includes disbursement of fresh credit, rescheduling of term loans and fund release for balancing, modernisation, rehabilitation and expansion (BMRE) of industrial units.
Talking to the FE, another BB official said the rising trend of the disbursement of industrial loans may continue in the coming months as the central bank is encouraging the banks and NBFIs to boost their credit flow to the productive sectors.
Small and medium-scale industries have contributed to increasing the flow of credit to the overall industrial sector during the period under review, the central banker said.
"We're working continuously to develop the SME sector across the country through providing refinancing facility to the banks and NBFIs," the BB official noted.
Senior bankers, however, said the power, telecommunications, pharmaceuticals, textile, garment and transportation sectors had received the lion's share of the credit.
"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 private commercial bank told the FE.
On the other hand, the recovery of the industrial loans increased by more than 16 per cent to Tk 1409.51 billion during the first nine months of the FY 16 from Tk 1214.92 billion in the same period of the previous fiscal.
