Green finance less than 2% of banks’ total disbursement

Green finance disbursed by banks for eco-friendly projects was less than 2% of the total loan disbursement at the end of December last year.

The rate was 7% of banks' term loans.

For non-bank financial institutions, the figure was only 1.15% of the total loan disbursement, which was 1.55% of their term loans.

The figures were revealed in the quarterly review report on green banking activities of banks and financial institutions and green refinance activities of the Bangladesh Bank on Tuesday.

At the end of December last year, banks' total loan disbursement was Tk2.28 lakh crore. Of this, green finance was less than Tk4,000 crore.

For non-bank financial institutions, the figures were Tk4,072 crore and about Tk55 crore respectively.

Dr Atiur Rahman, former governor of the central bank, said an International Finance Corporation report had said Bangladesh had scopes for $170 billion of green business.

He said this business would exceed several trillion dollars across the globe.

The economist believes with the new American President Joe Biden coming to power, the world will now focus on climate change.

He said those who are making fossil fuel would turn to clean fuel in the future, which meant the future world would be a green world.

"Our prime minister also wrote in the Financial Times in October last year that she wants a greener and safer world. She wrote that Bangladesh would use 100% renewable energy in 2050. This will require finance to happen," said Dr Atiur.

Citing Barry Eichengreen, a professor of economics at the University of California, he said central banks would have to take on the role of new regulators in the coming days addressing climate change and inequality.

The central bank report said the highest amount of loans was disbursed in the green establishment sector during the October-December period last year, followed by recycling and recyclable products, energy efficiency, and green brick manufacturing.

It also highlighted the extent to which banks and non-bank financial institutions are using clean fuel. Of 10,722 bank branches, 612 use solar energy while only one non-bank financial institution branch does so.

Moreover, solar energy is used in 31 of about 9,000 ATM booths of banks.

In the last quarter of last year, banks were able to utilise almost the entire amount of the Tk30 crore climate risk fund.

The green banking activities of banks and non-bank financial institutions in the quarter that ended on 31 December 2020 experienced a mixed trend in green finance in the financial sector, the report said.