Interest rates under refinancing scheme for green products decrease

The Bangladesh Bank has reduced the interest rates of loans under the Refinancing Scheme for Green Products, Projects and Initiatives by 2%.

The Sustainable Finance Department of the central bank on Sunday issued a circular in this regard, also bringing some changes in the scheme policy. 

From now on, the interest rate at the end borrowers level will be 5% for such loans with a tenure of less than 5 years, according to the circular. The rate will be 5.5% for loans with a tenure of more than 5 years but less than 8 years. In the case of over 8 years, borrowers have to pay 6% in interest.

Earlier, the interest rates were 7%, 7.5%, and 8% respectively. 

Banks will get the fund from the scheme at 1% less than the bank rate. So, they will pay 3% following the current rate.

As per the previous policy, borrowers were not able to apply for loans under the scheme if they had loans under other refinance schemes. The new circular has relaxed the condition to some extent. 

"With the new circular, all the 68 products under sustainable finance policy have been brought under this refinance scheme. Earlier, the product was 55 in number," a senior central bank official, seeking anonymity, told The Business Standard. 

Besides, "palm oil production" has been excluded from the list. Also, another product called "Affordable Green Housing" has been added, he noted.