Green and sustainable loan disbursement increases by Tk6,132 crore in June quarter
However, they expect loan disbursement to decrease in the next quarter due to the liquidity crisis banks are facing and the slowdown in global economic activity.
Loan disbursement of banks and other financial institutions within the green and sustainable finance sector has increased by 18%, equivalent to Tk6,132 crore, during the June 2023 quarter than the previous year, according to the Bangladesh Bank.
As per the central bank data, loans disbursed within the sector during April-June 2023 totaled Tk40,425 crore. In the same quarter last year, the loan disbursement in this sector amounted to Tk34,294 crore.
However, loan disbursements to the sector increased by only Tk116 crore in the June quarter of 2023 as compared to the March quarter.
Bankers said that bank investments have increased significantly till June this year. However, they expect loan disbursement to decrease in the next quarter due to the liquidity crisis banks are facing and the slowdown in global economic activity.
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A managing director of a private bank said that the rising cost of imports due to the increasing dollar price increased the import costs of industrial factories for capital machinery imports in that quarter.
Now, due to investment uncertainty and the dollar crisis in the country during the election period, imports have decreased significantly. This will reduce the flow of loans to these sectors in the future, he said.
He also said that Bangladesh's garment product shipments have decreased by about 30% due to the ongoing global economic slowdown, and this decline may continue in the coming months.
Sustainable finance refers to the business conducted in such areas and in such a manner that helps the overall reduction of external carbon emission and internal carbon footprint.
The banks and NBFIs are the major sources of financing industrial projects such as steel, paper, cement, chemicals, fertilisers, power, textiles, etc, which cause maximum carbon emission.
The central bank has issued directives mandating banks and financial institutions to allocate 5% of their total loans to green finance and 20% to sustainable financing.
According to data from the central bank, as of April-June 2023, the banks disbursed loans of Tk36,497 crore in the sustainable finance sector and Tk3,928 crore in the green finance sector, representing 13.16% and 6.16% of their respective targets.
During the April-June 2023 period, the disbursement of loans in the sustainable finance sector reached Tk36,497 crore, compared to Tk31,622 crore in the corresponding quarter of the previous year. This reflects an increase of Tk4,875 crore in loans in this sector during the same quarter of the current year.
In addition to sustainable finance, banks also disbursed Tk3,928 crore in green finance loans in April-June 2023, up from Tk2,671 crore in the same quarter of the previous year.
