Banks Recover Tk 16,000cr More Than Fresh Industrial Term Loans in FY26

Banks recovered nearly Tk16,000 crore more in industrial term loans than they disbursed in the fiscal year 2025-26, indicating that repayments remained ahead of fresh lending amid weak private-sector credit demand.

Banks disbursed Tk99,795.74 crore in industrial term loans in FY26, while they recovered Tk115,765.19 crore during the year, according to the latest Bangladesh Bank data.

The recovery was therefore Tk15,969 crore higher than fresh disbursements. In other words, banks recovered about Tk116 for every Tk100 they lent as new industrial term loans during the year.

The gap persisted in every quarter of FY26. In the April-June quarter alone, banks disbursed Tk20,028.86 crore but recovered Tk24,507.22 crore, leaving a gap of Tk4,478 crore.

New industrial term lending also declined in the latest quarter, with disbursements falling 15.7 per cent from Tk23,748.26 crore in January-March to Tk20,028.86 crore in April-June.

The trend was consistent throughout the year. Banks recovered Tk4,151 crore more than they disbursed in July-September, Tk4,472 crore more in October-December and Tk2,868 crore more in January-March.

However, the figures do not mean that the overall industrial term-loan portfolio has shrunk.

Outstanding industrial term loans stood at Tk451,426 crore at the end of June 2026, up 17.3 per cent from Tk384,854 crore a year earlier. The outstanding amount was also slightly higher than the Tk449,249 crore recorded at the end of March.

The data therefore point to a more complex picture: banks are continuing to recover substantial amounts from existing industrial borrowers, while the flow of new term lending remains comparatively weak.

The trend comes amid subdued overall private-sector credit growth. Private-sector credit grew only 4.75 per cent in August, while government-sector credit expanded 36.40 per cent, according to Bangladesh Bank data.

The figures suggest that the banking sector is seeing stronger repayment of existing industrial loans than fresh term-loan expansion. Weak business demand, cautious lending by banks and efforts by borrowers to reduce or restructure existing debt could all be contributing to the trend.

The pattern also raises questions about whether lower interest rates are translating into stronger demand for bank loans.
A senior Bangladesh Bank official said that although the central bank has reduced the policy rate to 9.5 per cent, private-sector credit growth remains close to a record low.

For businesses, the key concern is not only the pace at which banks are recovering loans, but also how much fresh credit is reaching factories and other productive sectors of the economy.

The latest industrial lending data show that banks continue to hold a substantial industrial loan portfolio. However, the pace of new lending has not kept pace with loan recoveries from existing borrowers.