Sharp Fall in Industrial Term Lending, Disbursement Down Tk 4,267 Crore in Final Quarter

There are signs of deep stagnation in long-term capital investment in the country's industrial sector. In the final quarter of fiscal 2026, disbursement of industrial term loans contracted at an alarming rate. In the April to June quarter in particular, term loan disbursement fell by about 16 percent compared with the previous quarter and by about 18 percent compared with the same period of the last fiscal year.

According to updated Bangladesh Bank data, in the outgoing fiscal 2026 banks released a total of Tk 99,796 crore in term loans to the industrial sector, which is only 2.7 percent more than the previous fiscal year's Tk 97,138 crore. Although there was slight growth for the full year, the flow of new loans saw a sharp decline towards the end of the fiscal year.

The quarter-by-quarter picture makes the decline clear. Disbursement of Tk 31,247 crore in the October-December quarter fell to Tk 23,748 crore in the following January-March quarter. In the final April-June quarter it fell further to Tk 20,029 crore. Compared with Tk 24,296 crore in the April-June quarter of the previous fiscal year, disbursement in this quarter fell by Tk 4,267 crore, or 17.6 percent.

Against this slowdown in disbursement, loan recovery and outstanding balances have risen. In fiscal 2026, banks were able to recover about 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. Rather, the fall in term loan disbursement has created a risk of industrial expansion stalling and new job creation being obstructed.

This downward trend has appeared at a time when concern is also growing over production and private investment in the overall 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 the country's growth falling to 3.4 percent.

Access to bank loans has become increasingly difficult for entrepreneurs. In March 2026, private sector credit growth fell to a 24-year low of 4.72 percent. With loan interest rates rising to 13 to 15 percent on top of that, setting up new factories and increasing production has become difficult.

The situation has been further complicated by a record amount of defaulted loans in the banking sector. 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 it is concentrated in just 15 banks.

According to economists, the central bank has adopted an 18-month special roadmap to overcome this crisis, created by a lack of good governance and high interest rates. However, they believe it will not be possible to restore the pace of employment and industrialisation without bringing back an investment-friendly environment, reducing the cost of loans and restoring confidence in the banking sector.