Bangladesh Bank has included more sectors under its green banking refinance scheme, taken up four years ago, in the wake of growing demand for renewable energy and environment-friendly activities in the country.
It also increased the credit limit for the sectors under the scheme, according to a circular issued Monday.
The new sectors that will come under the scheme included setting up plants for solar mini grids, a solar irrigation pump system, vermicompost production, hydropower, PET (polyethylene terephthalate) bottle reprocessing, solar battery reprocessing, LED bulb and Hybrid Hoffman Kilns in brick kilns for reducing carbon emergence.
The central bank launched the Tk2bn green banking refinance scheme in August 2009 to set up solar panels, bio-gas plants and industrial ETPs (effluent treatment plants) under the scheme – to help reduce industrial pollution and increase the power supply.
The fund has been named the “solar energy, biogas and effluent treatment plant sector refinance scheme.”
“The new more sectors have been brought under the green banking refinance scheme to build environment-friendly economy,” said the circular.
Under the scheme, Bangladesh Bank is providing loans to commercial banks at interest rates from 5% to 12% for direct refinancing and credit wholesale to the entrepreneurs, who will then have access to commercial bank loans in those sectors at a maximum interest rate of a further 5%. Overall interest rates will not exceed 12%, according to the fund’s conditions.
The central bank wrote to commercial banks yesterday detailing the scheme.
A maximum of 100% refinance facilities will be provided to the banks against their finance in setting up those plants in rural and urban areas and effluent treatment plants for industries, said the circular.
Under the revised scheme, the banks can sanction up to Tk40m loans for setting up effluent treatment plants. The limit was formerly Tk10m.
The banks will be allowed to provide loans in rural areas worth up to Tk175,000 to install home solar panels and Tk150,000 for setting up solar mini grids.
For biogas power plants, loans from Tk50,000 up to Tk2.5m can be allocated for coordinated cattle farming under the scheme. For PET bottle reprocessing plants, LED bulb manufacturing plants and environment-friendly brick kilns, banks can provide credit up to Tk50m.
The scheme was undertaken in line with the government’s plan to meet 5% of the total demand for electricity from green energy by 2015 and 10% by 2020.
According to the latest available data, the BB has so far disbursed to the tune of Tk853.54m of the Tk2bn fund until December 2012.
The credit flow to the green projects from the refinance scheme shows that the disbursement level has yet to reach a satisfactory condition due mainly to the reluctance of banks, said an official.
