Banking sector's short-term foreign loans for industrialisation not very effective: Study

A study on Bangladesh’s banking sector says the country’s short-term foreign loans for industrialisation are not very efficient compared to that of long-term borrowings.

The Bangladesh Institute of Bank Management (BIBIM) in its research reveals that the country’s private sector foreign loan has increased to 24 per cent in last September compared to the public sector loans of 76 per cent.

However, short–term loan is not helping much for industrialisations.

The research, released Thursday at a seminar in Dhaka, is conducted by Director of the BIBM Dr Prashanta Kumar Banerjee and his team.

The title of the research is “Private Commercial Borrowing from Foreign Sources in Bangladesh: An Anatomy”.

The study also says, out of the total private sector borrowing from foreign sources, a Compound Annual Growth Rate (CAGR) of 35.15 per cent is short-term borrowing while only 6.23 per cent was the long-term borrowing.

According to the Bangladesh Bank, Bangladesh’s public and private sectors’ total external commercial borrowing was US$46.705 billion in last calendar year.

Among the private sector external borrowing in 2017, it has taken $8.45 billion or 35.15 per cent of total borrowing as the short-term loan while $2.89 billion or 6.23 per cent as the long-term borrowing.

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