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Disbursement of trade and commerce loans and advances by non-bank financial companies (NBFCs) saw a considerable decline in April-June quarter of 2025, signaling a slowdown in lending activity in the sector, according to Bangladesh Bank (BB) data.
The loan disbursement fell by Tk 1.84 billion or 11.40 per cent to Tk 14.25 billion during the period compared to the previous quarter. It reached Tk 16.09 billion in the January-March period this year, the BB data shows. Distribution of such loans stood at Tk 14.84 billion in October-December 2024 whereas it was Tk 10.51 billion in July-September 2024.
Experts and sector insiders have attributed the drop in these loans to weak financial health of a number of NBFCs, stranded assets and deposits and higher repayment risks, which have made them more cautious in lending. They have also pointed to sluggish business confidence and rising borrowing costs as key factors behind the slowdown.
In addition, NBFCs witnessed a steady decline in their outstanding trade loans and advances over the past year, falling to Tk 156.11 billion in the April-June quarter of 2025 - the lowest level in five quarters.
The central bank data show that the outstanding trade loans and advances of NBFCs stood at over Tk 163.50 billion in April-June 2024. Since then, the figure has inched down every quarter: over Tk 160.27 billion in July-September 2024, over Tk 157.25 billion in October-December 2024, over Tk 156.83 billion in January-March 2025, and finally over Tk 156.12 billion in April-June 2025.
When asked, Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, said the decline in disbursement of trade and commerce loans by NBFCs highlights the cautious approach of lenders amid growing economic uncertainties. The drop in the last quarter coupled with a steady fall in outstanding trade loans and advances indicates that NBFCs are tightening credit in response to repayment risks and market volatility, Dr Reaz said.
"It is important for policymakers and financial institutions to closely monitor these trends, as sustained contraction in trade-related lending could impact the flow of credit to businesses and the overall trade sector," he said.
Strengthening risk management, ensuring adequate liquidity, and supporting NBFCs in maintaining their lending capacity will be crucial to stabilising trade financing in the coming quarters, Dr Reaz stated. "Many of the NBFCs are currently ailing with weak financial health, stranded assets and deposits, which have eroded their capacity to expand loan portfolio," he added.
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