Call for Tk10,000cr renewables fund to minimise banks’ risk

Like the Covid recovery fund, the Bangladesh Bank should form a renewable energy fund of at least Tk10,000 crore with support from the national budget to reduce lenders' risks, speakers said at a roundtable yesterday (23 Ausgut).

They stressed that the central bank alone cannot shoulder the burden of promoting sustainable financing in the country. The government must step in with fiscal support, such as funds and incentives, and ensure the availability of credible data to scale up green energy and sustainability-linked projects. 

The roundtable, organised jointly by Oxfam and The Business Standard under the former's fair financing initiative, underscored the urgent need for large-scale financing to meet Bangladesh's renewable energy ambitions.

Photo: TBS

Hasan Mehedi, member secretary of the Bangladesh Working Group on External Debt, pointed out that the government has recently decided to generate 3,000MW of solar power through a Rooftop Solar Programme within this fiscal year. The plan requires $2.4 billion (Tk29,280 crore) in financing in just 10 months.

Also, the revised Renewable Energy Policy 2025 also targets to achieve 20% renewable energy share by 2030 and 30% by 2040, which would need $7.2 billion (Tk87,230 crore) investment in the next five years.

But financing such projects remains a challenge, as commercial banks are reluctant to take the risks. "Credit risk and non-predictable return on investment are two major barriers for distributed renewable energy," Mehedi said.

To mitigate this, he suggested a tripartite model: the government and Bangladesh Bank providing 25% of the capital cost as subsidy, commercial banks extending up to 50% as loan, and the rest 25% to be borne by the prosumer. 

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said Bangladesh, though one of the least carbon emitters, is among the most climate-vulnerable nations, requiring billions in adaptation financing. 

He noted that 90–95% of industrial financing comes from banks, as bond and capital markets remain shallow, with banks historically driving industrial growth and power generation. 

While banks can support green initiatives, he stressed the transition cannot rely on them alone. Large-scale financing and green funds should come through government fiscal policies, while Bangladesh Bank should focus on regulatory guidance and supportive credit lines. 

Mohammad Rafiqul Islam, managing director of United Finance, pointed out the challenges, risks, and the need for government involvement in green financing for banks and financial institutions.

He said that while Bangladesh Bank has set targets and offers incentives for green finance, investments in this sector also involve risks. These risks should not be imposed entirely on banks and financial institutions; instead, government fiscal policies should provide support.

Dr Suborna Barua, chairman of International Business at Dhaka University, said, "Bangladesh has advanced in sustainable finance but fair financing remains overlooked. He argued sustainability is meaningful only if rooted in fairness, based on five principles — equity, justice, inclusivity, impact, and transparency and accountability. Violation of any makes financing unjust, such as inequity or human rights abuse."

He also stressed third-party verification to monitor green loans, as banks now certify projects themselves, creating conflicts of interest. Barua also flagged poor data and lack of disclosure. Not all green projects are fair — costly solar may exclude the poor, while microcredit, though pro-poor, is not always green. He urged balancing green with fairness, avoiding "green elitism" and "social policing."]

Dr Kazi Maruful Islam, professor, department of development studies, Dhaka University, said the Ministry of Finance must be held accountable for fair implementation of tax and subsidy policies. Bangladesh Bank should proactively, not reactively, assess banks' environmental and social impacts and monitor financial flows. At the same time, the private sector, civil society, media, and research institutions must be included in the discussion, he said.

Deputy Governor of Bangladesh Bank Nurun Nahar said the Sustainable Finance Department was established in 2016, which has been playing an important role in achieving the SDGs.

However, she said achieving the goals of sustainable finance is not possible without compliance with Bangladesh Bank's guidelines, active participation of stakeholders, and cooperation among the government, banks, and financial institutions. Positive impacts can be ensured through reporting and policy integration processes. She also mentioned that she would discuss with relevant departments whether third-party institutions could be engaged to monitor and audit investments in these sectors. 

Ashish Damle, country director, Oxfam, Nurul Alam Masud, CEO, Participatory Research and Action Network, Doulat Akter Mala, president of Economic Reporters' Forum and Sariful Islam of Oxfam also spoke among others. Sajjadur Rahman, deputy editor of TBS moderated the programme.