Sustainable finance has demonstrated a remarkable surge in Bangladesh’s banking sector, marking a significant shift towards environmentally-conscious lending practices. Official reports reveal that sustainable finance extended by banks witnessed a substantial year-on-year increase of nearly 40 percent, reaching Tk 35,387 crore in the first quarter of 2023 compared to Tk 25,290 crore in the same period of 2022. This growth is attributed to higher loan disbursements to eco-friendly businesses and industries. Notably, the central bank’s initiatives since 2009, including the introduction of green banking activities and sustainable finance policies, have played a pivotal role in driving this trend. Green finance, a subset of sustainable finance, saw a 65 percent year-on-year surge to Tk 2,775 crore in the first quarter of 2023, albeit down from Tk 4,050 crore in the previous quarter.
In alignment with the nation’s commitment to sustainable development, the percentage of green finance relative to total term loans exhibited a remarkable rise, quadrupling from 1.22 percent in 2019 to 5.08 percent in the first quarter of 2023. Similarly, sustainable finance witnessed an ascending trajectory, growing from Tk 82,551 crore in 2021 to Tk 130,762 crore in 2022. This evolution represented 8.04 percent of total loans in 2021, elevating to 13.77 percent in the first quarter of 2023. Impressively, a substantial number of banks and non-bank financial institutions (NBFIs) embraced these sustainable financing trends, with 56 out of 61 banks and 13 out of 34 NBFIs engaging in sustainable finance activities in the first quarter.
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