Credit flow to the industrial sector has registered a more than 12% jump year-on-year in July-September of the current year as economic activities have now bounced back with the pandemic situation turning the corner.
According to the latest data of the Bangladesh Bank, disbursement of bank loans to the sector amounted to Tk1,06,596 crore, while it was Tk94,849 crore in the same period a year ago.
But the disbursement in the quarter dropped by Tk644 crore from Tk1,07,241 crore in the April-June quarter of this year.
The bank loan disbursement to the industrial sector was lower in June last year owing to the pandemic. The situation has now improved because of different stimulus loans provided by the government. But the overall credit to the private sector marked a rise.
Private sector credit growth, which had slumped owing to the pandemic and the pressure of interest rate capping, jumped to 9.44% in October, the highest in the past one year.
The spike was the result of a rising demand amid resumption of economic activities.
Credit growth had dipped below 9% in October last year and hit its lowest of 7.55% in May this year.
According to the central bank, in the first nine months of this year (January-September), disbursements to the industrial sector increased by Tk44,035 crore or 16.88% to Tk304,803 crore from Tk260,768 crore in the same period a year ago .
Besides, in the third quarter, the industrial loan recovery was Tk82,637 crore, a 1.89% fall from Tk84,232 crore in the same period in 2020, according to the latest data.
In July-September, term loans provided to large, medium and small ventures of the industrial sector amounted to Tk14,834 crore, which was 23.66% or Tk4,596 crore lower than in March-June this year.
In addition, Tk91,762 crore in current working capital loans was disbursed to large, medium and small sectors in contrast to Tk87,810 crore in the previous quarter.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, told The Business Standard that credit flow to the private sector is increasing as the pandemic situation has normalised. So, it is normal that credit to the industrial sector will grow.
Besides, businesses are also taking out bank loans to import raw materials and capital machineries as they have significantly increased production to meet growing demand at home and abroad, he added.
Import payments have increased by more than 50% to $23.39 billion over the first four months of the current fiscal year.
At the end of September this year, the banking sector's total disbursed loans stood at 11,65,210 crore, up by Tk101,584 from Tk10,63,626 crore in September last year. Besides, the default loans in the banking sector surpassed Tk1 lakh crore in November, according to central bank data.