Green, sustainable financing falls by 6.42pc in Jul-Sept

Green and sustainable financing of banks and non-bank financial institutions (NBFIs) dropped by 6.42 per cent during the July-September 2023 over the previous quarter.
According to the Bangladesh Bank, such funding in terms of loans was recorded at Tk 378.29 billion during the period in question against Tk 404.25 billion during the April-June period.
The regulator's latest report styled 'Quarterly Review Report on Sustainable Finance of Banks and Financial Institutions (FIs)' disclosed the funding data.
During the July-September, banks and NBFIs' contribution of green finance was Tk 43.56 billion, which was Tk 4.28 billion greater than the April-June quarter.
Green financing by banks and NBFIs increased by nearly 9.8 per cent during the period.
As for sustainable finance, contribution of banks and NBFIs' total was Tk 329.99 billion, which was over Tk 34.97 billion less than the April-June quarter.
Such contribution declined by nearly 10.6 per cent during the period under review, the BB data revealed.
All scheduled banks and NBFIs have already formed their own sustainable finance unit in compliance with the regulatory order.
The BB introduced the Sustainable Finance Policy in December 2020. Through this policy, the BB has defined sustainable finance for banks and NBFIs.
As per the BB policy, banks and FIs have to maintain 5.0-per cent green financing and 20-per cent sustainable finance in their term loan disbursements.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank (MTB), said the probable effects of political uncertainty and economic slowdown could contribute to a decline in fund disbursements.
Despite current challenges, he remains optimistic that fund disbursement will experience positive growth in the upcoming days.
Mr Rahman emphasised that banks and financial institutions were diligently adhering to the regulatory directives for the distribution of funds.
Forty-seven out of 61 banks and 12 out of 34 NBFIs have had exposure in green finance in the reporting quarter.
The total amount invested in green finance has been Tk 36.04 billion by banks and Tk 7.5 billion by NBFIs during the July-September period.
They invested in sustainable agriculture, CMSMEs, socially responsible financing, working capital and demand loan of green products/projects/initiatives and priority green/eco-friendly products for the trading sector under the sustainable finance category.
Moreover, 15 banks and 11 NBFIs were able to fulfil their target (20 per cent) of sustainable finance compared to the total loan disbursements in July-September quarter.
Forty-nine out of 61 banks and 19 out of 34 NBFIs have conducted 'environmental and social risk rating' in the reporting quarter, according to the BB data.
To broaden financing for green products like solar energy, biogas plant and effluent treatment plant, the BB established a revolving refinance scheme amounting to Tk 2.0 billion from its own fund in 2009.
The size of the fund has been increased from Tk 2.0 billion to Tk 4.0 billion in view of the growing demand for financing of eco-friendly products/initiatives.
The product line has been enhanced to 70 under 12 categories. Since inception, the total amount of over Tk 8.1 billion was disbursed as a refinance facility from the fund until 30 September 2023.

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