Green and sustainable loan disbursement increased by Tk 6,132 crore in the June quarter

Compared to 2022, the loan disbursement of banks and other financial institutions in the green and sustainable financial sector has increased by Tk 6,132 crore or 18 percent in the June quarter of this year. This information is stated in a report of Bangladesh Bank.

According to the report, a total of Tk 40,425 crore was disbursed in this sector during April-June this year. Last year was 34 thousand 294 crores.

And compared to the March quarter of 2023, the loan disbursement in these two sectors has increased by Tk 116 crore in the June quarter.

Bankers said that till June this year, banks’ investments have increased significantly. However, due to liquidity crisis of banks and slow global economic activity, loan disbursement will decrease in the next quarter.

The MD of a private bank said that due to the increase in dollar price, the cost of importing machinery of industrial factories increased in that quarter. Now due to uncertainty in investment and dollar crisis in the country during the election period, imports have decreased greatly. Which will greatly reduce the flow of credit in these sectors in the future.

He also said that in the ongoing global economic context, Bangladesh’s garment product orders have also decreased by about 30 percent. As a result, the import of new industrial factories and capital machinery has reduced a lot. Future investment in this sector will further decrease.

Sustainable finance refers to conducting business in areas and in ways that help reduce external carbon emissions and internal carbon footprints.

Banking and NBFIs are one of the major sources of financing for industrial projects like steel, paper, cement, chemicals, fertilizers, power, textile etc., which emit the highest carbon emissions.

A significant amount of private sector investment is invested in the green and sustainable financial sector.

Private sector credit growth in Bangladesh fell to 9.75 in August. which is the lowest in 22 months. Private sector credit has been declining consistently since November 2022.

The central bank has directed 5 percent green finance and 2020 percent sustainable financing of the total loans of banks and financial institutions.

According to Central Bank data, banks and financial institutions have disbursed Tk 3,928 crore in green financing and Tk 36,497 crore in sustainable. Which is 6.16 and 13.16 percent of the total target respectively.

Arfan Ali, former managing director of Bank Asia Limited, told The Business Standard that investment in the green finance sector is very important to sustain the country’s economy. It is necessary to invest in this sector to overcome the country’s investment risk, social and corporate governance risk.

He also said that the banks which finance this sector according to the rules will do well in the future. Besides, there are some international standards for investment in these sectors, if they are followed, further progress will be made.