The Bangladesh Bank has relaxed the criteria for state-owned commercial banks to borrow from the Green Transformation Fund (GTF), which focuses on supporting the export-oriented textile, textile products and leather manufacturing industries.
A letter, issued on Sunday by the central bank's Foreign Exchange Policy Department to all authorised dealers of foreign exchange, said, "State-owned commercial banks with more than 10% Non-Performing Loans (NPL) will now be able to borrow from the green fund."
To facilitate customers and borrowers in a wider scale under the GTF programme, state-owned commercial banks that have shortfalls in loan/investment provision, capital and liquidity will also be eligible to borrow from this fund, it said.
Loans disbursed from the Tk3,720 crore fund reached Tk778 crore as of December last year, which was only 21% of its total size, sources have said.
Insiders added that stringent conditions set for obtaining loans from this fund, as well as a lack of proper knowledge about this facility are the major reasons why exporters have not been showing much interest in the loan.
Welcoming this initiative, industry leaders said financing from this fund will accelerate setting up a strong backward linkage industry, especially for woven fabrics and leather industries.
In 2016, the Bangladesh Bank introduced a $200 million refinance scheme named the GTF for the export-oriented industries of the textile and leather sectors to set up environment-friendly infrastructure.
Before that, the central bank had another similar fund for financing green buildings.
The GTF is intended to grant all manufacturers and exporters in the textiles, textile products, and leather industries access to financing in foreign exchange, with the goal to help them import capital machinery and accessories for implementing environment-friendly initiatives.
The refinance fund is provided for 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 and work environment improvement initiatives in the export-oriented textiles and leather industries.