Bangladesh: Industrial loan growth 33% in Jan-Mar

[Homo Sapiens]

Industrial loan growth 33% in Jan-Mar​

As banks lent Tk124,865 crore to the industries in the October-December quarter last year, January-March industrial loan disbursement rose by Tk2,806 crore compared to previous quarter​

Demand for industrial loans picked up early-2022 as economic recovery from the coronavirus pandemic drove the private sector credit growth and companies had to spend more to import capital machinery from the international market.

Industrial loan disbursement registered 33.75% growth in the January-March quarter of the current fiscal year compared to the corresponding period last year, according to data released by the central bank on Wednesday.

According to the data, the country's industrial sector borrowed Tk127,671 crore in January-March period, while the bank borrowing was Tk90,966 crore in the same quarter last year marked by Covid-led business slowdown.

As banks lent Tk124,865 crore to the industries in the October-December quarter last year, January-March industrial loan disbursement rose by Tk2,806 crore compared to previous quarter.

Industry insiders said many factories were closed in March last year due to Covid, while construction of new industrial units hit a snag, which affected the industrial loan growth. Subsequently government stimulus and waned Covid rates improved the overall credit flow.


According to the latest data, loan recovery in January-March was Tk101,877 crore – up by 20% compared to the corresponding period last year.

In January-March, term loans to big, medium and small industrial ventures dropped by Tk39 crore compared to corresponding period last year. Working capital loans to both small and big industries early this year rose by more than 41% compared to previous year.

In conditions of anonymity, the managing director of a private bank said overall private sector credit flow is increasing as the pandemic situation improves.

"Industries have ramped up the production as the country's both import and export jump. Besides, the industries are spending more to import capital machinery as prices in the international market soar," he added.

The country's foreign currency reserve dropped to $41.38 billion in June from $48 billion in August last year owing to the rise in imports.

Import bills ballooned 41% to $68.66 billion in July-April this year, while exports grew by 35% to $41 billion, causing a $27.56 billion trade deficit.

According to the Bangladesh Bank, total banking sector loans stood at around Tk16.66 lakh at the end of April this year. The amount was around Tk14.69 lakh at the end of April last year.

Top News / Industry​

Industrial Loan / Economic recovery

COMMENTS​

 

[mb444]

Industrial loan growth 33% in Jan-Mar​

As banks lent Tk124,865 crore to the industries in the October-December quarter last year, January-March industrial loan disbursement rose by Tk2,806 crore compared to previous quarter​

Demand for industrial loans picked up early-2022 as economic recovery from the coronavirus pandemic drove the private sector credit growth and companies had to spend more to import capital machinery from the international market.

Industrial loan disbursement registered 33.75% growth in the January-March quarter of the current fiscal year compared to the corresponding period last year, according to data released by the central bank on Wednesday.

According to the data, the country's industrial sector borrowed Tk127,671 crore in January-March period, while the bank borrowing was Tk90,966 crore in the same quarter last year marked by Covid-led business slowdown.

As banks lent Tk124,865 crore to the industries in the October-December quarter last year, January-March industrial loan disbursement rose by Tk2,806 crore compared to previous quarter.

Industry insiders said many factories were closed in March last year due to Covid, while construction of new industrial units hit a snag, which affected the industrial loan growth. Subsequently government stimulus and waned Covid rates improved the overall credit flow.


According to the latest data, loan recovery in January-March was Tk101,877 crore – up by 20% compared to the corresponding period last year.

In January-March, term loans to big, medium and small industrial ventures dropped by Tk39 crore compared to corresponding period last year. Working capital loans to both small and big industries early this year rose by more than 41% compared to previous year.

In conditions of anonymity, the managing director of a private bank said overall private sector credit flow is increasing as the pandemic situation improves.

"Industries have ramped up the production as the country's both import and export jump. Besides, the industries are spending more to import capital machinery as prices in the international market soar," he added.

The country's foreign currency reserve dropped to $41.38 billion in June from $48 billion in August last year owing to the rise in imports.

Import bills ballooned 41% to $68.66 billion in July-April this year, while exports grew by 35% to $41 billion, causing a $27.56 billion trade deficit.

According to the Bangladesh Bank, total banking sector loans stood at around Tk16.66 lakh at the end of April this year. The amount was around Tk14.69 lakh at the end of April last year.

Top News / Industry​

Industrial Loan / Economic recovery

COMMENTS​

This should be a positive sign and in all probability is.

However BD banking sector carries huge bad debts ...hopefully these loans lead to economic growth and expansion and will not add to the bad loans portfolio.

 

[Wergeland]

This should be a positive sign and in all probability is.

However BD banking sector carries huge bad debts ...hopefully these loans lead to economic growth and expansion and will not add to the bad loans portfolio.

There is huge problem with trust in banking sector. Too much corruption and looting by banking staff and political musclemen.

If Bd gov does not step in, nothing will change and BD financial sector will continue to be denied from achieving its potential.

 

[PadmaBridge]

This should be a positive sign and in all probability is.

However BD banking sector carries huge bad debts ...hopefully these loans lead to economic growth and expansion and will not add to the bad loans portfolio.

South Asian banking sector is plagued with bad loans to politically connected people.

These crooked businesses can easily bring down the banking sector and with it the economy.

Japanese malaise is also attributed to its corporate bad debts.

 

[mb444]

South Asian banking sector is plagued with bad loans to politically connected people.

These crooked businesses can easily bring down the banking sector and with it the economy.

Japanese malaise is also attributed to its corporate bad debts.

This is not a asian problem its a global issue. BD however is much more vulnerable due to our low tax receipts.

 

[PadmaBridge]

This is not a asian problem its a global issue. BD however is much more vulnerable due to our low tax receipts.

There’s no correlation between the two.

Britain has very high taxes but it’s banking sector destroyed its economy. From which it is yet to recover.

South Asian governments are corrupt and unaccountable.

Giving them more tax powers is like “giving koral to a banor”.

 

[bluesky]

According to the data, the country's industrial sector borrowed Tk127,671 crore in January-March period, while the bank borrowing was Tk90,966 crore in the same quarter last year marked by Covid-led business slowdown.

As banks lent Tk124,865 crore to the industries in the October-December quarter last year, January-March industrial loan disbursement rose by Tk2,806 crore compared to previous quarter.

For me, it is a very happy news that the industrialists have taken loans amounting to Tk127,671 crore in the three months of this year, January-March. It is about $14 billion.

I am happy with this news because this $14 billion will produce goods worth about $4.5 billion every year and the GDP increasing by at least $10 billion.

 

[mb444]

There’s no correlation between the two.

Britain has very high taxes but it’s banking sector destroyed its economy. From which it is yet to recover.

South Asian governments are corrupt and unaccountable.

Giving them more tax powers is like “giving koral to a banor”.

The correlation is as follows. Banking sector can not fail (whatever the reason be it corruption or incompetence ) in a capitalist model.

The national bank always serves as the ultimate guarantor of last resort. In developed economies the national bank will underwrite these debts where it can through borrowing ( standard borrowing or by taking on sovereign debt) just as it was done in UK in the 2008 financial debacle.

GoB does not have this capacity... it has low tax receipts and does not release sovereign bonds (the two are obviously linked) and there is minimal liquidity in the private banking sector.

In some ways BD maintaining a closed financial model protects itself from capital outflows but other side has blocked itself off from capital inflows.

Bad debts therefore has to be tackled internally... here circular causation comes into play.... low tax, low liquidity and the serious situation BD finds itself in.

BD tax receipts needs to rise, without it government can not operate and develop the nation. I understand your position around corruption that needs to be tackled. Bad debts essentially are money stolen and leaving our financial system and no amount of money whitening initiative is going to rectify it.