Industrial Term Lending Falls Sharply, Down Tk 4,267 Crore in One Quarter

Term lending to Bangladesh's industrial sector has fallen sharply. In the final quarter of fiscal 2026, April to June, banks disbursed Tk 4,267 crore less in industrial term loans than in the same quarter of the previous fiscal year — a fall of 17.6 percent. The figures point to a deep stagnation in long-term capital investment.

According to updated Bangladesh Bank data, banks released a total of Tk 99,796 crore in term loans to industry in the outgoing fiscal 2026. The figure for the previous fiscal year was Tk 97,138 crore, meaning disbursement for the full year rose by only 2.7 percent.

The flow of new lending, however, slowed sharply towards the end of the year. Disbursement in the October-December quarter was Tk 31,247 crore; it fell to Tk 23,748 crore in the January-March quarter, and fell further to Tk 20,029 crore in the final April-June quarter.

Disbursement in the April-June quarter of the previous fiscal year was Tk 24,296 crore. Against that figure, lending in this year's final quarter fell by Tk 4,267 crore — down by about 16 percent from the previous quarter and by about 18 percent from the same period of the previous fiscal year.

Against this slowdown in disbursement, loan recovery and outstanding balances moved in the opposite direction. In fiscal 2026, banks recovered around Tk 116,000 crore in term loans, 8.4 percent more than the previous year. At the same time, the accumulated outstanding balance rose by Tk 66,000 crore in one year to Tk 451,000 crore.

Analysts say the rise in recovery and outstanding balances does not indicate new investment. Instead, they believe the fall in term loan disbursement has created a risk that industrial expansion will stall and new job creation will be hampered.

The downward trend has appeared at a time when concern is also growing over production and private investment in the wider economy. Against a backdrop of uncertainty in electricity and gas supply, high inflation and structural weakness in the banking sector, a World Bank report has forecast that the country's growth will fall to 3.4 percent.

Access to bank loans has become increasingly difficult for entrepreneurs. In March 2026, private sector credit growth fell to 4.72 percent, the lowest in 24 years. With lending interest rates having risen to between 13 and 15 percent, setting up new factories and raising production have become difficult.

The banking sector's record level of defaulted loans has made the situation more complicated. At the end of June, defaulted loans stood at more than Tk 607,000 crore, which is 32.78 percent of total loans. As much as 85 percent of that amount is concentrated in just 15 banks.

Economists say the central bank has adopted a special 18-month roadmap to overcome the crisis, which they attribute to a lack of good governance and high interest rates. Without restoring an investment-friendly environment, reducing the cost of loans and rebuilding confidence in the banking sector, however, they believe it will not be possible to revive employment and industrialisation.