Investment in green initiatives showed a downward trend as disbursement of low-cost loans by banks has been decreased by 7.26 percent in the July-September period of 2020 to support eco-friendly industries, businesses and other projects.
However, funding by financial institutions (FIs) has been increased by 131.59 percent although these institutions disbursed only Tk Tk 826.31 million.
According to Bangladesh Bank (BB), total amount invested as green finance was Tk 23,204 .75 million by banks and Tk 826.31 million by FIs during July-September period of 2020. Banks disbursed Tk 33,421.96 million in October-December period of 2019, Tk 28, 372.12 million in January-March, 2019 and Tk 25,021.29 million in April-June, 2020.
FIs disbursed Tk 826.31million during July-September, 2020 period. They disbursed Tk 1,703, 50 million in October-December, 2019, Tk 2139.79 million in January-March, 2019 and Tk 356.79 million in April-June, 2020.
Talking to Bangladesh Post, a BB official said, 59 banks and 34 FIs have exposure in green finance in the reported quarter.
“The central bank issued a policy guideline for green banking in February, 2011. Under the guideline, all operating banks and FIs had introduced environment-friendly banking activities in the country,” said chief spokesperson of Bangladesh Bank (BB) Serajul Islam.
The central bank has been reviewing the green financing situation, he said, adding that the banks and FIs are instructed to take steps to provide regular training to their staff to boost green financing.
BB is pursuing to boost up the whole scenario by taking appropriate policy initiatives, he said, adding that refinance support from BB is also playing an important role to incentivize the green banking activities.
To broaden the financing avenue for green products like solar energy, bio-gas plant and effluent treatment plant, Bangladesh Bank established a revolving refinance scheme amounting to Tk 200 crore from its own fund for solar energy, Bio-gas and Effluent Treatment Plant (ETP) in 2009.
The size of the fund has been increased from Tk 200 crore to Tk 400 crore in view of the growing demand for financing of environment-friendly products/initiatives. The product line has been enhanced to 55 under 9 categories. Since inception, total amount of Tk 4,773.39 million has been disbursed as refinance facility from the fund till September 30, 2020.
Under the Green Transformation Fund (GTF) in USD and GTF in Euro schemes, 19 banks and 11 banks have already signed participation agreement with BB. The disbursement from this Fund is US $85.79 million till September, 2020. In July-September, 2020 quarter disbursement from this fund is US$ 22.48 million USD only in textile sector
During the pandemic situation of Covid-19, HSBC Limited, BASIC Bank Limited, NRB Bank Limited, Al-Arafah Islami Bank Limited, EXIM Bank Limited, IFIC bank Limited, Mutual Trust Bank Limited, Islami Bank Bangladesh Limited, BRAC Bank Limited, Dutch Bangla Bank Limited and Bank Asia Limited have done very well and they disbursed above 10 percent of total funded term loan. Among FIs, Hajj Finance Company Limited, Lankan Alliance Finance Ltd and Infrastructure Development Co Ltd. have performed very well.
As per the central bank’s instruction, the official said, banks and FIs have formed a “Climate Risk Fund” by allocating 10 percent of their Corporate Social Responsibility (CSR) budget for this fund.
BB established a lending scheme namely “Financing Brick Kiln Efficiency Improvement Project”, supported by Asian Development Bank (ADB), to help reduce greenhouse gas emissions and refine particulate pollution from brick fields, the BB official said.
As per the quarterly report, BB is trying to play a significant role by monitoring the whole scenario and by taking appropriate policy initiatives.
