Funding for sustainable and green projects is declining again.
Lending to the sustainable and green industry sector by banks and financial institutions has declined. In the last three months- July-September-the overall lending to this sector has decreased by about 11,000 crore taka, while in the previous three months- April-June-it increased by about 28,000 crore taka.
Although private, foreign and specialized banks have been able to disburse more loans than the target in the last three months, state-owned banks and non-bank financial institutions are lagging behind. This information has been found in the updated report of Bangladesh Bank.
Sustainable financing means lending to the sectors which play a role in environmental and social development, quality of loan and employment. These projects are agriculture, CMSME, environment-friendly factories and socially responsible projects, etc. In addition, the main purpose of green project finance is to make maximum utilization of natural resources so that environmental balance could be maintained as far as possible.
Considering these factors, those industries and institutions suitable for reducing the costs related to electricity, water and paper are considered green industries. Stakeholders have expressed that day by day the number of environmentally friendly and sustainable industries is increasing. The Bangladesh Bank, for this reason, issued a policy and set a target to increase financing in these two sectors. Still, many banks are not able to disburse loans as expected. The six state-owned banks lag in the list. These banks are Sonali, Janata, Agrani, Rupali, Basic, and Bangladesh Development Bank.
According to the policy, a minimum of 20 percent of total loans disbursed by banks has to be disbursed to sustainable projects. And there is a condition to disburse 5 percent of the total term loans in the environment-friendly sector. The Bangladesh Bank report says that banks and financial institutions have provided a total of 1 lakh 5 thousand 872 crore taka to sustainable and green industries in the three months starting from July to September. This is about 10 thousand 927 crore taka less than the previous three months. Those three months, the banks and the financial institutions had doled out loans to this sector totaling 1 lakh 16 thousand 799 crore taka; on the contrary, in the preceding three months, the same sector has got only 88 thousand 696 crore taka lent from it. As per the report, commercial banks gave loans amounting to 1 lakh 4 thousand 240 crore taka during this period which is 9 thousand 587 crore taka less compared to previous three months. The loan disbursement of the financial institutions decreased about Tk 1,360 crore to Tk 1,631 crore in the same period.
State-owned banks and non-bank financial institutions are far behind. According to the report, in the three months under discussion, state-owned banks disbursed Tk 1,111 crore to sustainable projects, which is only 6.90 percent of the total loans disbursed by banks. In the same period, banks granted about Tk 2,300 crore to the green sector, which is 4.69 percent of their term loans. On the other hand, non-bank financial institutions disbursed Tk 1,631 crore to the green sector, which is 13.49 percent of their total disbursed loans. At the same time, financial institutions disbursed Tk 960 crore to the green sector, which is 11.62 percent of their total term loans.
Private, foreign and specialized banks ahead According to the report, private banks have disbursed Tk 81,523 crore to the sustainable sector, which is 63.69 percent of the total loans disbursed. During the same period, they have disbursed Tk 5,257 crore to the green sector, which is 20.78 percent of their term loans. In this period, the Sharia-based Islamic banks have disbursed Tk 13,786 crore to the sustainable sector, which is 29.32 percent of their total disbursed loans, and they disbursed Tk 959 crore to the green sector, which is 13.88 percent of their term loans. In this period, foreign banks have disbursed Tk 5,830 crore to the sustainable sector, which is 21.53 percent of their total disbursed loans. In this period, foreign banks disbursed Tk 136 crore to the green sector, which is 8.42 percent of their term loans. In this period, specialized sector banks disbursed Tk 1,988 crore to sustainable projects, which is 51.61 percent of their total disbursed loans. In this period, banks disbursed only Tk 11.1 lakh to the green sector, which is 0.29 percent of their term loans.
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