Industrial term loan disbursements increased in the financial year 2024-25 comparing with the same period in the previous year.
According to the latest data from Bangladesh Bank, banks disbursed Tk 97,138 crore in industrial term loans during FY25, up from Tk 88,738 crore during FY24.
Bankers and analysts attributed the growth to improvement in business environment to some extent after the change in government on August 5, 2024.
Business activities increased during the second half of the FY25.
LC opening for imports鈥攁 leading indicator of industrial investment鈥� surged to $69 billion in FY25 compared with that of $68.9 billion in FY24.
Moreover, the dollar rate remained stable at around Tk 123 each for more than six months which relieved businesses from high costs for currency volatility.
On top of that, the Bangladesh Bank bought near $2 billion from banks since July to halt the dollar rate from plunge.
Due to the high remittance earnings and exports, dollar supply increased significantly in recent time.聽
The dollar exchange rate was at Tk 110 in May 2024 and Tk 99 in December 2022.
However, loan disbursements remained subdued due to ongoing political instability and massive non-performing loans of banks
The economic policy direction under the interim government remains unclear, further undermining investor confidence, they said.
Industrial loan recovery also increased to Tk 1,07,297 crore, up from Tk 94,148 crore in the FY24, reflecting businesses鈥� attempts to deleverage in an uncertain environment.
Total outstanding industrial term loans increased to Tk 3,84,854 crore from Tk 3,43,338 crore a year earlier, indicating weak loan demand and limited new industrial activity.
The banking sector itself is under stress, grappling with a severe liquidity crisis, a growing volume of non-performing loans (NPLs), and a weakening asset quality profile, leading to depositor anxiety.
Moreover, businesses struggled with the rising cost of borrowing.
Lending rates climbed to nearly 14 per cent, further discouraging new investment.
Private sector credit growth dropped to 6.5 per cent in June, remains well below pre-crisis levels, highlighting the broader economic slowdown.
The ongoing economic uncertainty is squeezing business revenues and cash flow, making it increasingly difficult for companies to meet their debt obligations, experts said.
Many companies were struggling to meet debt obligations, which聽was raising concerns of a new wave of loan defaults and further destabilization of the banking sector, they said.