Dhaka, Bangladesh (BBN) – The volume of classified loans in the industrial sector increased by 32.62 per cent or BDT 61.66 billion in the fiscal year (FY) 2015-16 mainly due to slower recovery drives by banks and financial institutions, officials said.
The non-performing loans (NPLs) of industrial sector rose to BDT 250.68 billion in the FY 16 from BDT 189.01 billion in the previous fiscal, according to the central bank’s latest statistics.
“We’ve expedited monitoring and supervision aiming to reduce the amount of non-performing loans along with ensuring proper use of industrial credits,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
As part of the move, the 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 22.82 per cent to BDT 3039.84 billion in the last fiscal year from BDT 2475.04 billion in FY 15, the official figures showed.
The central banker also higher capital machinery imports have pushed up the disbursement of overall industrial loans in the FY 16 compared to the previous fiscal.
Disbursement of the overall industrial credits covering working capital and term loans increased by 20.77 per cent to BDT 2648.88 billion in the FY 16 from BDT 2193.30 billion a year before, the BB data showed.
The estimate includes disbursement of fresh credits, the rescheduling of term loans and fund release for balancing, modernisation, rehabilitation and expansion (BMRE) of industrial units.
“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,” another BB official explained.
He also said small and medium-scale industries have contributed to increasing the flow of credit to the overall industrial sector during the period under review.
On the other hand, the recovery of the industrial loans increased by 16.88 per cent to BDT 1979.88 billion in the last fiscal from BDT 1693.95 billion in the previous year.
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 said.