Bangladesh Bank on Thursday asked scheduled banks to disburse at least five per cent of their total funded loans to the green finance projects in the private sector from 2015. The BB, however, asked the nine new scheduled banks and non-bank financial institutions to disburse at least three per cent and four per cent respectively of their total funded loans to the green finance projects.
The BB issued a circular to managing directors and chief executive officers of all banks saying that the central bank would take punitive measures against them in line with the bank and NBFIs acts if any of them failed to fulfill their disbursement target.
A BB official told New Age on Thursday that the banks usually disbursed two types of loans—funded and non-funded.
Under the non-funded loans, the banks finance to open letters of credit and give bank guarantee to any company.
The BB circular said that all banks and NBFIs would have to disburse at least 5 per cent of their total funded loans to the green finance projects from 2016.
The BB will consider the success of the banks and the NBFIs’ loan disbursement to the green project while it (central bank) will calculate their CAMELS ratings, it said.
The banks and the NBFIs will have to disburse the loans to the green products recognised by the central bank, the BB said.
The central bank has so far recognised 47 items as green products, the BB official said.
The recognised major green products of the central bank are biomass-based large biogas plants, poultry and dairy-based biogas plants, solar cooker assembly plants, solar water heater assembly plants, solar energy-based power production plants, solar energy-based cold storages, power switch assembly plants with auto sensor to reduce electricity consumption, and tube light assembly plants.
The BB has made mandatory the loan disbursement for the banks and the NBFIs as they continued to show reluctance to expand their green banking programmes, the official said.
The BB data showed the banks had disbursed Tk 687.32 crore in the direct green finance projects over the years till March 31, 2014 while they distributed Tk 7,182 crore in the indirect green finance projects.
The BB earlier created a refinancing scheme worth Tk 200 crore to expedite the green banking, but the banks continued to show little interest to use the fund.
The BB asked the banks in July 2013 to disburse at least Tk 5 crore annually for the green projects under the refinance scheme but a number of banks did not take proper initiative in this regard.
BRAC Bank managing director Syed Mahbubur Rahman earlier told New Age that it was a good
initiative to make it mandatory to disburse the loans in the direct green projects.
But the central bank should ascertain whether all the banks will be capable to do this, he said.
‘The central bank should scrutinise what types of credit risk will be faced by the banks through disbursing the loans in the projects’, he said.
Besides, the cost of funds of the banks also may increase if the banks disburse a huge amount of loan to the green projects, the BRAC Bank MD said.
-With New Age input
