Dhaka, Bangladesh (BBN) – The disbursement of industrial term loans decreased slightly in the first quarter of the current fiscal year (FY) following the banks particularly private commercial banks (PCBs) have squeezed lending for the same, officials said.

“The decline is not significant. We are hopeful that it would grow gradually in the coming months,” a senior official of the Bangladesh Bank (BB) said without elaborating.

Credit flow to the industrial sector declined by 0.48 percent to BDT 74.37 billion in the July-September period of FY12 from BDT 74.74 billion in the corresponding period of the previous fiscal, according to central bank statistics.

The estimate includes disbursement of fresh credit, rescheduling of term loans and fund release for balancing, modernisation, rehabilitation and expansion (BMRE) of industrial units, the central bank officials added.

“The BMRE and capital machinery import have contributed to the increased flow of credit to the industrial sector,” another BB official said.

Import of capital machinery — industrial equipment used for production — was up by 29.30 per cent to $ 597.44 million during the period under review against $ 462.05 million of the corresponding period of FY11.

Industrial term loans disbursed by the PCBs came down to BDT 50.88 billion in the Q1 of FY12 from BDT 55.29 billion in the same period of the previous fiscal, the BB data showed.

“Import of capital machinery for readymade garment (RMG) fell significantly during the period under review due mainly to the economic turmoil in Europe,” a senior official of a PCB said while explaining their term loan disbursement situation.

He also said the existing declining trend of industrial term loan disbarment may continue in the coming months.

The private banker said energy and power, telecommunications, pharmaceuticals, housing, construction and transportation sectors have received the lion’s share of the credit.

The recovery of term loans increased by 15.17 percent in the Q1 of FY12 as the banks and non-banking financial institutions (NBFIs) intensified their recovery drive in line with the central bank directives, the central bankers said.

The industrial credit recovery stood at BDT 68.11 billion in the Q1 of FY12 compared to BDT 59.14 billion in the same period of the previous fiscal.

BBN/SSR/AD-29Nov11-8:00 am (BST)