Defaulters barred from $200m green industry fund of BB

Banks at default or having excessive non-performing loans are being barred from accessing the US$200-milion Green Transformation Fund (GTF) meant for financing environment-friendly textile and leather industries in Bangladesh.
Officials said the central bank is set to issue guidelines shortly for speedy disbursement of the GTF money, which can also go for relocation of tanneries from capital's Hazaribagh  to Savar Leather Industrial City.  
"We're working to develop the guidelines for minimising environmental risks in the two export-oriented sectors," a senior official of the Bangladesh Bank (BB) told the FE Tuesday.
He said there is no provision for signing participatory agreements with the eligible commercial banks for disbursement of the GTF funds.
"But the banks will have to fulfill the eligibility criteria for borrowing from the Fund."
The banks will only be eligible for drawing and disbursing the money if they have an acceptable level of non-performing loans (NPLs) worth not more than 10 per cent of their total outstanding loan portfolios, the central banker explained.
"No banks will become eligible with shortfall in loan/investment provision, capital and liquidity," he noted.
Besides, loan defaulters in banking system/defaulters in realisation of export proceeds within statutory period or such extension as permitted by the central bank will not be eligible either. "We want to facilitate the readymade garment (RMG) and leather sectors offering low-cost long-term foreign-currency loan," another BB official said while explaining main objective of the special fund.
The tenure of loan will be from five to ten years with one year grace period.
Interest accrued for the grace period will be repaid in equal quarterly repayments without compounding, the central bank said in a circular, issued on January 14.
The BB has established the GTF aiming to accelerate sustainable growth in export-oriented textile and leather sectors conducive to transformation into green economy in the country.
The loan will be applicable only for green/environment-friendly initiatives. These are water-use efficiency in wet processing, water conservation and management, waste management, resource efficiency and recycling, renewable energy, energy efficiency, heat and temperature management, air ventilation and circulation efficiency, work-environment-improvement initiatives and other fields as identified by the central bank from time to time.
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