How Bangladesh Bank promotes sustainable finance through low cost refinance
With funds in local and foreign currency, Bangladesh Bank is making sustainable finance accessible to manufacturers and exporters, supporting both green projects and technological development
Bangladesh Bank has been actively promoting sustainable finance through the provision of low-cost refinancing schemes aimed at supporting environmentally and socially responsible projects.
The central bank has established four major refinancing programmes: the Green Products and Initiatives Fund of Tk1,000 crore, the Technology Development/Upgradation Fund of Tk1,000 crore, the Shariah-Based Refinancing Schemes for Green Products of Tk125 crore, and the Green Transformation Fund with a combined size of $200 million, Euro 200 million, and Tk5,000 crore.
Under these schemes, banks and financial institutions can access funds at highly concessional interest rates ranging from 1% to 2%. Customers benefiting from these funds receive loans at a maximum rate of 5%, significantly lower than the prevailing average lending rate of over 10% in the market.
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Refinance scheme for environment-friendly products and initiatives
To expand financing opportunities for green products such as solar energy systems, bio-gas plants, and effluent treatment plants, Bangladesh Bank launched a revolving refinance scheme of Tk200 crore from its own resources in 2009. This initial fund targeted financing for solar energy, bio-gas, and Effluent Treatment Plants (ETPs).
Over the years, recognising the rising demand for environmentally sustainable projects, the fund has been gradually expanded from Tk200 crore to Tk400 crore, and finally to Tk1,000 crore in 2023. The scheme now supports a wide range of 70 products across 11 categories.
Since its inception, a total of Tk1,482.42 crore has been disbursed under this refinance facility up to 31 March 2025.
The green initiatives and products that have received financing include:
- Biological Effluent Treatment Plants (ETP)
- Combination of Biological and Chemical ETPs
- Certified Green Buildings
- Foam Concrete Bricks
- Forestation projects (social, integrated, and agro)
- Installation of Energy Auditor Certified machinery, including industrial boilers
- Net Metering Rooftop Solar Systems
- Organic farming and vermicompost production
- Safety and workplace environment projects in factories
- Small-scale biogas plants
- Solar Home Systems, Solar Irrigation Pumping Systems, and Solar Mini-Grids
Green transformation fund (GTF)
In January 2016, Bangladesh Bank launched the Green Transformation Fund (GTF), a long-term refinancing programme worth $200 million. The scheme was designed to foster sustainable growth in the export-oriented textile and leather sectors while supporting the country's broader green economy goals.
In September 2019, the scope of the GTF was expanded to include all manufacturer-exporters, regardless of sector, allowing them to access funds for importing capital machinery and accessories for specified green initiatives. Subsequently, an additional Euro 200 million was incorporated into the fund. This Euro component enables the import not only of green machinery but also industrial raw materials for all manufacturing enterprises, including both export-oriented and deemed exporters.
Under the USD and Euro components of the GTF, 30 and 26 banks, respectively, have signed participation agreements with Bangladesh Bank. As of September 30, 2023, disbursements totalled $140.94 million and Euro 71.21 million.
In December 2022, Bangladesh Bank introduced an additional Tk5,000 crore refinance fund in local currency to support the same purpose. By 31 March 2025, Tk1,800 crore had been disbursed to 63 clients across 20 banks.
Technology development/upgradation fund
The Technology Development/Upgradation Fund, with a size of Tk1,000 crore, provides refinancing to facilitate the modernisation and technological advancement of Bangladesh's export-oriented industries. The fund covers 35 industrial sectors listed under 11 initiatives or categories in the Export Policy 2021–2024.
Up to March 31, 2025, a total of Tk983 crore has been disbursed under this fund. During the January–March 2025 quarter alone, Tk63.21 crore was released for seven projects, reflecting ongoing demand for technological development across multiple industrial sectors.
Bangladesh Bank's strategic refinancing initiatives continue to play a crucial role in promoting environmentally sustainable and technologically advanced projects, making sustainable finance increasingly accessible to both urban and rural enterprises across the country.
