The Bangladesh Bank has directed the banks and financial institutions to come up with complete information about eco-friendly projects for providing them with refinancing benefits.
It mentioned that due to lack of complete information it is becoming complicated to lend eco-friendly initiatives from the refinancing fund of the central bank.
Besides, the central bank has said the role of banks and financial institutions should be increased to raise the awareness of entrepreneurs in taking up environmentally friendly projects.
The central bank's Sustainable Finance Department on Wednesday issued a circular in this regard.
It says applications for refinancing benefits for the production of environmentally friendly products or business ventures do not have proper documentation.
In many cases, the banks do not submit required documents and information which create problems in reviewing applications and making decisions.
Noting that this is undermining the objective of refinancing facilities, the Bangladesh Bank has directed the banks and financial institutions involved in refinancing to follow the checklist in this regard.
In March 2017, a refinancing fund of Tk200 crore was created for environmentally friendly business ventures or projects.
The central bank raised the amount to Tk400 crore in April last year due to increased demand.
This fund provides loans for a period of more than 5 to 8 years. Loan interest rate is minimum 7% and maximum 8%.
However, the maximum loan interest rate for solar pump projects used for irrigation in agriculture is 7%.
The debt-capital ratio for this fund is 80:20. In other words, if a customer's capital is Tk20, he or she can take a maximum loan of Tk80.
Meanwhile, the circular further said that the activities of helpdesk should be ensured for the environmentally friendly initiatives in the branches of banks and financial institutions.
In this case, sustainable finance policy should be followed properly, it added.