BB allows Islamic banks to finance green projects

Bangladesh Bank (BB) has issued a guideline allowing Islamic banks and non-banking financial institutions (NBFIs) to finance in eco-friendly green projects, including renewable energy initiatives under its Shariah-based refinancing scheme.

Under the guidelines, the interested Islamic banks and NBFIs will have to sign separate agreements with the BB's Green Banking and CSR Department to become the partners of the scheme.

After signing the deal, the banks and NBFIs will be known as participating financial institutions (PFIs).

The central bank issued a circular Monday in this connection and asked managing directors and chief executive officers of all Islamic banks and financial institutions for taking necessary measures to disburse the refinancing fund.

The banks and NBFIs may lend 100 per cent of their refinancing fund to the renewable energy and eco-friendly projects, but the projects should be selected from the current list of 47 products, prepared by the central bank.

"We expect that the guidelines will help the Islamic banks and NBFIs to finance in the eco-friendly green projects more effectively," a senior BB official told the FE.

He also said the Islamic banks and financial institutions will now be able to get benefit of the refinancing scheme, which was not possible earlier.  

Currently, eight Islamic banks and two NBFIs are running their businesses across the country.

Earlier on Thursday, the BB issued another guideline for the refinancing scheme for Shariah-based funding aiming to create job opportunities in rural areas by helping the existing agro-based industries and creating new entrepreneurs.

The central bank opened an account for introducing a refinancing scheme exclusively for Sharia-based banks and NBFIs on September 18 last to utilise their excess funds.

Under the new scheme, the Islamic banks and NBFIs are allowed to invest their excess funds on a three-month renewable basis after maintaining the BB's requirements.  

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