A sharp deceleration in industrial term loan disbursement during the final quarter of the 2025–26 fiscal compounded the slowdown in long-term investments within Bangladesh's industrial sector, according to the latest Bangladesh Bank data.
While term loan disbursements maintained some momentum during the early part of FY2026, activity slumped significantly in the closing months. Specifically, industrial term loan disbursement during the April–June quarter plummeted by nearly 16 percent compared to the previous quarter, and dropped by about 18 percent year-on-year.
According to central bank statistics, total industrial term loan disbursement across FY2026 stood at Tk 99,796 crore, registering a meager 2.7 percent growth from Tk 97,138 crore recorded in the previous fiscal year.
However, the quarterly trajectory reveals a steep downward trend:
July–September quarter stood at Tk 24,771 crore.
October–December quarter:Tk 31,247 crore
January–March quarter: Tk 23,748 crore
April–June quarter: Tk 20,029 crore
During the April–June quarter alone, industrial term loan disbursement dropped by Tk 4,267 crore—or 17.6 percent—compared to Tk 24,296 crore in the corresponding period of the previous fiscal year. Compared to the January–March quarter, the April–June disbursement fell by roughly 15.7 percent.
Recovery and Outstanding Balances:
Conversely, loan recovery and total outstanding balances registered an upward tick. Industrial term loan recovery reached approximately Tk 1.16 lakh crore in FY2026, marking an 8.4 percent increase from Tk 1.07 lakh crore the previous year.
Meanwhile, the total outstanding balance of industrial term loans rose to Tk 4.51 lakh crore at the end of FY2026, up from Tk 3.85 lakh crore in FY2025—representing a 17 percent (Tk 66,000 crore) increase over the year.
This contraction in new credit flow coincides with broader economic concerns surrounding investment and production. A World Bank update in October 2026 reported that Bangladesh’s economic growth slowed to 3.4 percent in FY2026, weighed down by declining private investment and exports, banking sector vulnerabilities, and acute gas-power shortages.
Borrowing costs have also surged, with interest rates on industrial and working capital loans climbing to between 13 and 15 percent. Private sector credit growth slumped to 4.72 percent in March 2026, marking a 24-year low and making business expansion severely challenging for entrepreneurs.
Banking Sector Vulnerabilities and NPL Crisis: The credit squeeze is further compounded by mounting non-performing loans (NPLs). By the end of June 2026, classified loans in the banking sector crossed Tk 6.07 lakh crore, accounting for an alarming 32.78 percent of total loans. Notably, about 85 percent of these defaulted loans—totaling roughly Tk 4.99 lakh crore—are concentrated within just 15 banks.
Financial analysts note that while increased loan recovery and higher outstanding balances appear positive on paper, they do not necessarily reflect an expansion in productive industrial investments. Instead, the stagnation in fresh loan disbursement threatens to constrain future industrial growth and employment generation.
Experts emphasize that reviving private investment and employment will require restoring trust in the banking sector, lowering borrowing costs, ensuring adequate financing for viable industrial projects, and implementing robust governance reforms, alongside Bangladesh Bank's ongoing 18-month roadmap to tackle defaulted loans.