BD lags behind green financing
Bank spends 2 pc of total credit by ignoring BB’s instruction at least 5 pc
Shah Alam Nur: Bangladesh is spending inadequate fund to implement green projects across the country due to mainly lack of political commitment, said experts.
Despite considerable publicity in green banking, the share of green finance in total bank advances remained poorly over 2percent, whereas the Bangladesh Bank guideline suggests the ratio to be at least5percent, industry insiders said.
Green banking has attained worldwide attention since it plays a vital role in financing economic activities in attaining the objectives of sustainable growth and development for the economy.
However, Bangladesh Bank recently introduced a refinance scheme namely Green Transformation Fund amounting to US$ 200 million for the export oriented industries of the textile and leather sectors to set up environment friendly infrastructures.
The refinance fund will be 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.
Experts said such amount is inadequate for green financing, According to them, high cost of compliance, uneven competition, banks’ strict terms and conditions and weak regulatory environment were other key challenges of green finance.
Lack of awareness was a major challenge for green financing, they added.
Besides, high cost of compliance, uneven competition, banks’ strict terms and conditions and weak regulatory environment were other key challenges of green finance, they mentioned.
Prime minister’s Economic Affairs Adviser Mashiur Rahman said environmental risks are increasing with the industrialization. The technology used in the industry must be environment-friendly. Everyone must come forward to tackle the environmental risks, he added.
Bank Asia President and Managing Director Md Arfan Ali said his bank was playing an important role in green financing. The bank was financing the purchase of solar panel in rural areas through agent banking outlets, he added.
He said lack of awareness, lack of adequate reward and incentives and weak regulatory environment were key challenges in popularizing the green financing.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) senior vice-president Faisal Samad said:
“Our RMG sector is growing rapidly. Bangladesh has the greenest RMG factories in the world. On the other hand, the sector is facing various problems. Day by day, number of international competitors is increasing, while the cost of production is soaring. Given the situation, the government should increase incentive to convert factories to green ones.”
Bangladesh Banks’ sustainable finance department general manager Khondkar Morshed Millat said central bank issued green banking policy in February 2011 to promote green financing in industries.”The central bank continues coordination and consultations with all stakeholders concerned and time to time the technical advisory committee for 52 green products/ initiatives/ projects gives advices,” Millat said. Mindset was very important for green finance, pointed out Morshed Millat.
However, experts have underscored the need for reducing interest rate on green banking to implement green projects across the country.
They highlighted the importance of formulating capacity development strategies to create a more enabling environment for the private sector to invest in green and sustainable projects.
Source: dailyindustry.news
