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Green and sustainable financing by banks and non-bank financial institutions (NBFIs) increased by 29.25 per cent in the April-June quarter (Q2) of 2024, compared to the previous quarter, despite a turbulent economic climate.
According to the Bangladesh Bank's (BB) latest 'Quarterly Review Report on Sustainable Finance of Banks and Financial Institutions (FIs)', green loan disbursements totalled Tk 1.24 trillion in Q2 of 2024, up from Tk 959.35 billion in Q1 of 2024.
The report shows that the combined green finance contribution from the banks and NBFIs in Q2 of 2024 was Tk 79.71 billion, an increase of Tk 7.32 billion from Q1. It also shows a 10.11 per cent increase in overall green financing by the banks and NBFIs in Q2.
According to the BB report, the banks invested Tk 69.78 billion and the NBFIs Tk 9.92 billion in green finance in Q2 of 2024.
The report notes that the banking sector is a major source of funding for the industries like steel, paper, cement, and chemicals, which have heavy carbon footprints.
It also covers green finance/investment by 61 scheduled banks and 34 finance companies under refinancing scheme. Similar trends are observed in sustainable finance data.
The combined contribution from the banks and NBFIs to sustainable finance in Q2 of 2024 was Tk 1.16 trillion, an increase of Tk 281.03 billion compared to Q1.
The banks invested Tk 1.13 trillion and the NBFIs Tk 29.92 billion in sustainable finance in Q2 2024.
The BB latest report also shows some 39 per cent of female and 61 per cent of male received the sustainable fund.
In the April-June quarter of 2024, the top performing banks were BRAC Bank PLC, Jamuna Bank PLC, NRB Bank Ltd, Eastern Bank PLC, Prime Bank PLC, EXIM Bank PLC, City Bank PLC, United Commercial Bank PLC, Premier Bank PLC, Mutual Trust Bank PLC, and Bank Asia PLC.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank (MTB), earlier said the banks and NBFIs are carefully following the rules in distributing funds.
Even with the present economic challenges, he is hopeful that fund distribution will remain positive in the coming days.
The BB introduced its Sustainable Finance Policy in December 2020, defining sustainable finance for the banks and NBFIs. According to the policy, they have to allocate 5.0 per cent of their term loan disbursements to green financing and overall 20 per cent to sustainable finance.
Besides, all the scheduled banks and NBFIs have to establish their dedicated sustainable finance units and prepare own sustainable finance policy mandatorily.