Bangladesh Bank has set targets of direct green financing for all the banks and non-banking financial institutions to ensure financing environment-friendly projects.
It imposed the target at 5% of the total disbursed loans by the scheduled banks operating in the market since early 2013. The rate is 3% for the nine new banks and 4% for non-banking financial institutions.
It will be 5% for all banks and non-banking financial institutions from January 2016.
The instruction came for the first time will be effective immediately, said a circular Bangladesh Bank issued yesterday.
The green financing will be applicable only for 47 green products recognised by the central bank.
The achievement of the expected target will be considered in the valuation of CAMELS rating, an international bank-rating system.
The circular warned that appropriate measures will be taken against those banks that will fail to achieve the target.
The central bank has set the target to bring the banks under obligation, said Bangladesh Bank Deputy General Manager Morshed Millat.
The products under green financing include biomass-based large Biogas plant, poultry and dairy-based large Biogas plant, 1mw or above solar PV plant, solar cooker assembly plant, solar water heater assembly plant, solar air heater and cooling assembly plant, solar-driven cold storage, Bioenergy-driven power generation plant, power switch assembly plant for power saving, hybrid cook stove assembly plant, LED bulb or tube light assembly plant, power generation from municipal waste, compost generation from municipal waste, recyclable non-oven polypropylene yarn and baggage manufacturing and palm oil production plant etc.
The Bangladesh Bank has issued the policy guidelines for green banking to the scheduled banks in February 2011.
All the 47 banks have their own green banking policy guidelines approved by their board of directors and have Green Banking Unit (GBU) for pursuing green banking activities.
They also have their own Green Office Guide for conducting in-house green activities.
The central bank had launched the Tk200 crore green banking refinance scheme in August 2009 to set up solar panels, biogas plants and industrial ETPs (effluent treatment plants) under the scheme to help reduce industrial pollution and increase the power supply.
Under the scheme, Bangladesh Bank is currently providing loans for commercial banks between 5% and 12% interest rate for direct refinancing and credit wholesale to the entrepreneurs.
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.
