Dhaka, Bangladesh (BBN) – Disbursement of industrial term loans recorded a significant fall by nearly 21 per cent in first quarter (Q1) of the current fiscal over that of the previous quarter, officials said.

The disbursement of industrial term loans dropped to US$780.80 million (BDT 54.03 billion) during the July-September period of the fiscal 2009-10 (FY10) from $982.42 million (BDT 67.98 billion) in the April-June period of FY09, according to the central bank statistics.

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

The major shares of loans were disbursed through syndications among the commercial banks and non-banking financial institutions during the period, bankers said.

“The disbursement of term loans has declined during the period as lag effect of the global meltdown,” a senior official of the Bangladesh Bank (BB), the country’s central bank, said.

Besides, some local entrepreneurs could not make fresh investment mainly due to the lack of adequate infrastructure facilities including gas and electricity, the BB official added.

“We expect that the disbursement of term loans would pick up shortly after introduction of the framework for public-private partnership (PPP),” the BB official said, adding that relaxation of loan rescheduling rules might also help increase the disbursement of the term loans.

The central bank has already taken a series of measures allowing banks to reschedule classified loans of different industries without any down payment.

The top bankers, however, expect that the flow of industrial credit will pick up from the new calendar year if the government is able to ensure better supply of gas and electricity to the industrial units across the country.

“New entrepreneurs are not interested to set up industrial plants due to shortage of gas and electricity,” Managing Director and Chief Executive Officer of Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told BBN in Dhaka.

He also thinks that the industrial term loans disbursement will increase from the upcoming new calendar year if better supply of gas and electricity is ensured by the government.

Mr. Bukhtear and BB officials have said that term loans disbursement would pick up sharply if the government could immediately finalize guidelines for new PPP investment initiative.
The recovery of term loans also dropped by more than 24 percent during the period under review despite the banks and non-banking financial institutions (NBFIs) intensified their recovery drive in line with the central bank directives.
During the period, the industrial credit recovery stood at BDT 38.32 billion as against BDT 50.70 billion of the previous quarters, the BB’s data showed.

BBN/SS/SI/AD-30Decemeber09-1:45 pm (BST)