Green projects barely attract banks

Banks are not interested in green banking. According to a report of the Bangladesh Bank (BB) on ‘Green Banking Programme’, only 1.28 percent of bank loan goes for financing ‘green projects’ – a major setback for the central bank’s Green Banking Initiative. 

Holding lack of consciousness responsible for the reluctance, economists advocated for creating awareness among the bankers.     

“There is a lack of consciousness at all levels regarding ‘green banking’. Bankers will have to be more conscious about financing in this sector,” said Helal Ahmed Chowdhury, former Managing Director of Pubali Bank and Supernumerary Professor of Bangladesh Institute of Bank Management (BIBM).  

Green banking covers a multitude of areas that include, among other things, a bank being environmentally friendly to how its money being invested. Green bank financing considers all the social and environmental factors with the aim to protect the environment and conserve natural resources.

In 2011 the BB issued a guideline for ‘green banking’, instructing banks to disburse 5 percent of their loans for ‘green projects’. SM Moniruzzaman, deputy governor of Bangladesh Bank, said: “The central bank is working on the issue, and prepared a separate guideline for green banking.”

He, however, stressed on the need for awareness among the bankers.

Meanwhile, the central bank in last June opened its ‘Green Financing Fund’ to investors in all sectors, which was open only for the investors in readymade garments and leather industries earlier. 

Putting high hopes on the move, a BB official said that it would help popularize green banking, while expanding its scope.

According to the BB report, banks have disbursed loan, amounting to Tk 3,049 crore, in ‘green project’ financing in last January-March term, total investment during the period being Tk 2, 36,650 crore.

“Though the investment amount going to green project financing is poor compared to the total investment for the period, the short-term (quarterly) trend showed gradual improvement over the last five terms,” states the BB report.