Dhaka, Bangladesh (BBN)- Industrial credit disbursement recorded a significant rise by over 30 per cent in the second quarter (Q2) of the current fiscal compared to the corresponding period of the last fiscal, indicating an upward trend in investments.
The disbursement of industrial term loans stood at BDT 94.5019 billion during the October-December period of the current fiscal (2010-11). A total of BDT 72.1144 billion was disbursed during the corresponding period of the last fiscal, according to the central bank statistics.
"It's a very positive indication in terms of the country's overall economic growth," a senior official of the Bangladesh Bank (BB) said, adding that the commercial banks are financing the SMEs as well as productive sectors in line with the BB's advices.
This includes fresh credit, rescheduling of term loans and fund release for balancing, modernization, rehabilitation and expansion (BMRE) of industrial units, the central bank officials said.
"The upward trend of the industrial term loan disbursement will continue in the next quarters to meet the growing demand of the businessmen and entrepreneurs," another BB official said, adding it will also depend on the global economic situation.
The BB official also said import of capital machinery, industrial raw materials and intermediate goods increased during July-December period of current fiscal against the corresponding period of the last fiscal following the higher disbursement of industrial term loans.
Import of capital machinery -- industrial equipment used for production -- was up by 34.94 per cent to $975.06 million during the period, reflecting a rising level of confidence among the entrepreneurs about the country's future industrial prospects, the central bank officials added.
The energy and power, telecommunications, pharmaceuticals and textile sectors have received the lion's share of such loans, a senior official of a commercial bank said.
He also said the major shares of loans were disbursed through syndications among the commercial banks and non-banking financial institutions during the second quarter of this fiscal.
"The disbursements of term loans may decline slightly in the next quarters as most of the banks particularly private commercial banks are now busy bringing down their credit-deposit ratio (CDR) to a safe limit within the stipulated timeframe, set by the BB," the commercial bank official added.
On February 20 last, the central bank of Bangladesh set June 30, 2011 as deadline for bringing down the CDR of the commercial banks to a reasonable level.
Under the directives, 19 conventional commercial banks will have to bring down their CDR to 85 percent while five Sharia-based Islamic banks to 90 percent by June 30 next.
The recovery of term loans increased by 38.37 per cent during the period under review as the banks and non-banking financial institutions (NBFIs) intensified their recovery drive in line with the central bank directives, the BB officials said.
During the period, the industrial credit recovery stood at BDT 65.3388 billion compared to BDT 47.2206 billion of the corresponding period of the previous fiscal, the BB data showed.
BBN/SSR/AD-17Mar11-1:54 am (BST)