B Mirror Report : Bangladesh Bank has introduced new measures to strengthen transparency and safeguard the credibility of sustainable finance activities in the country’s financial sector. The move is aimed at improving the accuracy of disclosures and preventing the misrepresentation of environmentally friendly initiatives.
In a circular issued on Tuesday, the central bank’s Sustainable Finance Department (SFD) outlined updated guidelines designed to curb “greenwashing” and ensure that sustainability-related data reported by banks and financial institutions remains dependable and clear.
To enhance transparency, Bangladesh Bank has withdrawn certain provisions of its 2023 policy and reorganized the classification of several products so they better reflect their true environmental or social impact under the sustainable finance framework.
A key aspect of the new directive involves reassigning a number of activities previously labeled as Green Finance to other appropriate categories. This change is intended to align reporting with the actual nature and contribution of these initiatives.
According to the circular, healthcare services provided in climate-sensitive and disaster-prone regions, which were earlier included under Green Finance (Green SRF), will now be reported as other sustainable linked finance.
At the same time, digital loans or credit facilities disbursed through Mobile Financial Services (MFS) or other digital platforms by banks when directed toward climate-vulnerable areas and excluding consumer finance will qualify as Green Finance.
The central bank has also shifted maritime transport projects with low-rated Environmental and Social Due Diligence (ESDD), along with broadband and IT solutions that use environmentally friendly supply chains, from Green Finance to other sustainable linked finance.
Additionally, several products previously classified under green SRF have now been placed in the category of Socially Responsible Finance within the broader Sustainable Linked Finance structure.
Bangladesh Bank noted that the revised instructions have been issued under Section 45 of the Bank Company (Amendment) Act, 2023, and Section 41 of the Finance Company Act, 2023. The order, signed by Chowdhury Liakat Ali, Director of the SFD, will take effect immediately for all scheduled banks and financial institutions operating in the country.
Through these updated definitions and classifications, the central bank aims to preserve the integrity of the Green Finance label by clearly distinguishing environmental projects from initiatives that are primarily social or digital in nature.
