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Loan disbursement by non-bank financial institutions (NBFIs) surged 46 per cent year-on-year in the April-June quarter thanks to a recovery in demand after the reopening of the economy in the second half of last year.
Financial institutions disbursed Tk 6,839 crore in the July-April period of 2022, up from Tk 4,680 crore in the same period a year ago, according to Bangladesh Bank data released on Sunday.
Agriculture and fishing saw the highest year-on-year growth in disbursement followed by transport, trade, commerce and construction.
The industrial sector, which accounted for 37 per cent of the total loans disbursed during the quarter, registered 21 per cent growth in the three months ending in June 2022 from a year ago.
Top officials of two leading NBFIs said the growth in disbursement was high as the sector is recovering from a decline in demand due to the resurgence of Covid-19 in the April-June period last year.
“The transport sector was one of the worst hit and disbursements for this sector were low last year,” said Mominul Islam, managing director and CEO of IPDC Finance Ltd.
Agriculture and fishing saw the highest year-on-year growth in disbursement followed by transport, trade, commerce and construction
He said disbursements began to recover since the October-December period last year and maintained an upward trend the following quarter.
“Liquidity availability was good in the market last year. Refinance schemes from Bangladesh Bank have also played significant roles,” Islam added.
However, overall disbursement of loans declined marginally in the April-June period from the previous January-March quarter amid uncertainty on the fallout of the Russia-Ukraine war on the local economy.
“We have felt that hit in the last quarter,” said Islam, adding that growth may be slow this quarter too.
During the April-June quarter, NBFIs also saw a decline in overall deposits excluding inter-NBFIs both on a year-on-year and quarter-to-quarter basis. Deposits at NBFIs totalled Tk 42,086 crore in the three months leading to June 2022, down 0.44 per cent from Tk 42,272 crore the previous quarter.
Deposits at the financial institutions stood at Tk 42,603 crore in the April-June period last year, Bangladesh Bank data showed.
Mesbah Uddin Ahmed, general manager of IDLC Finance Ltd, said the cap on interest rates on lending and deposits imposed since April 2020 has affected deposit growth in the financial sector.
But there is no cap on interest rates on bank deposits, he said.
He then said the third wave of coronavirus infections in the April-June period seriously affected loan disbursements. Usually, the NBFIs as a whole disburse around Tk 8,000 crore each quarter.
“Construction activities were almost shut at the time and demand fell drastically for the recurrent lockdowns to slow the pandemic,” he said. “Because of the dip in disbursement last year, we are seeing very high growth this year.”
Bangladesh has 34 NBFIs operating through 281 branches mostly in urban areas. As of June 2022, their total deposits stood at Tk 42,086 crore while advances were Tk 69,080 crore, as per central bank data.
(TDS)
