In the first quarter of 2023, sustainable finance extended by banks increased by nearly 40 percent year-on-year to Tk 35,387 crore. Green finance provided by banks saw an even more significant surge, rising by 65 percent year-on-year to Tk 2,775 crore, compared to Tk 1,689 crore in the same quarter of 2022. Non-bank financial institutions (NBFIs) also significantly increased green credit disbursements, more than doubling to Tk 839 crore in January-March 2023, up from Tk 409 crore the previous year.
To incentivize banks and financial institutions, BB has set targets for converting a percentage of their portfolio into green finance and sustainable finance. In December 2022, these types of financing accounted for a significant portion of total term loan disbursements and portfolio size. Banks and NBFIs are also required to allocate a portion of their corporate social responsibility budget to a climate risk fund.
Furthermore, BB introduced a Sustainability Rating for Banks and NBFIs in 2020 and issued a Policy on Green Bond Financing in 2022, offering opportunities for involvement in climate financing for mitigation and adaptation. Additionally, BB has a revolving refinance scheme to support solar energy, biogas, and ETP projects, and efforts are underway to align various policies with national plans, develop climate finance policies, and establish guidelines for climate risk management.
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