Demand for industrial loans picked up early-2022 as economic recovery from the coronavirus pandemic drove the private sector credit growth and companies had to spend more to import capital machinery from the international market.
Industrial loan disbursement registered 33.75% growth in the January-March quarter of the current fiscal year compared to the corresponding period last year, according to data released by the central bank on Wednesday.
According to the data, the country's industrial sector borrowed Tk127,671 crore in January-March period, while the bank borrowing was Tk90,966 crore in the same quarter last year marked by Covid-led business slowdown.
As banks lent Tk124,865 crore to the industries in the October-December quarter last year, January-March industrial loan disbursement rose by Tk2,806 crore compared to previous quarter.
Industry insiders said many factories were closed in March last year due to Covid, while construction of new industrial units hit a snag, which affected the industrial loan growth. Subsequently government stimulus and waned Covid rates improved the overall credit flow.
According to the latest data, loan recovery in January-March was Tk101,877 crore – up by 20% compared to the corresponding period last year.
In January-March, term loans to big, medium and small industrial ventures dropped by Tk39 crore compared to corresponding period last year. Working capital loans to both small and big industries early this year rose by more than 41% compared to previous year.
In conditions of anonymity, the managing director of a private bank said overall private sector credit flow is increasing as the pandemic situation improves.
"Industries have ramped up the production as the country's both import and export jump. Besides, the industries are spending more to import capital machinery as prices in the international market soar," he added.
The country's foreign currency reserve dropped to $41.38 billion in June from $48 billion in August last year owing to the rise in imports.
Import bills ballooned 41% to $68.66 billion in July-April this year, while exports grew by 35% to $41 billion, causing a $27.56 billion trade deficit.
According to the Bangladesh Bank, total banking sector loans stood at around Tk16.66 lakh at the end of April this year. The amount was around Tk14.69 lakh at the end of April last year.