B Mirror Desk: During the fourth quarter of 2024, specifically from October to December, there was a significant rise in green and sustainable finance. The Bangladesh Bank (BB) reported that banks and financial institutions collectively allocated Tk 86.46 billion towards green finance, marking an increase of Tk 18.49 billion from Tk 67.97 billion in the previous quarter of July to September.
Data from the BB indicates that green financing from banks and non-bank financial institutions (NBFIs) surged by approximately 27.2 percent during this timeframe. Since 2011, the BB has been actively supporting banks and NBFIs in this initiative. The implementation of the sustainable finance policy has enabled banks and finance companies to play a role in fostering inclusive and sustainable green growth.
This encompasses various areas such as green finance, sustainable agriculture, sustainable small and medium-sized enterprises (CMSMEs), socially responsible financing, and other sustainability-related activities. The regulator’s recent publication, titled ‘Quarterly Review Report on Sustainable Finance of Banks and Financial Institutions (FIs),’ revealed these funding figures. Additionally, the overall contribution to sustainable finance exceeded Tk 1.48 trillion, reflecting an increase of Tk 422.43 billion or 39.9 percent compared to Tk 1.05 trillion in the prior quarter.
The data from the BB also showed that sustainable financing by banks and NBFIs rose by nearly 39.9 percent during the reviewed period.
In the period from January to December 2024, 34 banks and 8 finance companies exceeded the green finance target of 5.0 percent of their total term loan disbursements. Additionally, 30 banks and 13 finance companies met their sustainable finance goal of 20 percent of total loan disbursements during the same year. Sustainable finance encompasses business activities that help reduce both external carbon emissions and the internal carbon footprint.
Data from the central bank indicates that between July and September 2024, the total contribution of banks and finance companies to green finance amounted to over Tk 67.97 billion, which is Tk 11.74 billion lower than the contribution recorded in the April to June 2024 period. During the same July to September timeframe, banks and financial institutions provided a total of Tk 1.06 trillion for sustainable finance, representing a decrease of Tk 109.27 billion compared to the Tk 1.17 trillion noted in the previous quarter.
The banking sector is crucial in financing industrial projects in sectors such as steel, paper, cement, chemicals, fertilizers, power, and textiles, all of which are significant contributors to carbon emissions. Notably, there were no investments in Green Bonds, Green SUKUK, or impact funds by banks and finance companies during the review period.
