Credit disbursement to sustainable finance sector declines by Tk610 cr in 3 months
Credit disbursement to the sustainable finance sector by the banks and financial institutions has declined by Tk610 crore in three months (January-March) despite instructions to raise disbursement in this sector.
The Bangladesh Bank has instructed the scheduled banks and financial institutions to disburse 20% of its credit for the sustainable finance sector. But the banks and financial institutions were able to achieve an average 9.96% of the credit disbursement target in the March quarter.
In December 2021, the amount of total disbursed credit was Tk26,760 crore which fell to Tk26,149 crore at the end of March.
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According to the January-March 2022 report of the banks and financial institutions, 53 banks out of 61 and 17 financial institutions of 34, have had exposure to sustainable finance in the quarter.
The Bangladesh Bank introduced a Sustainable Finance Policy in December 2020. According to the policy, all banks and financial institutions have to form their own Sustainable Finance Policy.
All scheduled banks and financial institutions have formed their own Sustainable Finance Unit in accordance with the instructions.
The banking sector is one of the major sources of financing industrial projects such as steel, paper, cement, chemicals, fertilisers, power, textiles, etc, which cause maximum carbon emission. Therefore, the banking sector can play an intermediary role between economic and social development and environmental protection, for promoting environmentally sustainable and socially responsible investment.
A Bangladesh Bank data showed that of the total sustainable finance fund, Tk7,350 crore was disbursed to agriculture sector, while Tk2,339 crore to the CMSME sector, Tk7,561 crore to socially responsible financing (SRF), and Tk6,287 crore for working capital and demand loan of green products.
Although credit disbursement has declined in the sustainable finance sector, the credit flow increased to the green finance sector in the March quarter.
In the January-March, 2022 period, contribution to green finance was Tk2,098 crore which is Tk130 crore more than October-December. In December 2021, the amount was Tk1,968 crore.
