Loan disbursement in sustainable finance sector drops

Loan disbursement of banks and non-bank financial institutions in the sustainable finance sector has declined by 9.03% at the end of the July-September period compared to the previous quarter of 2023.

According to Bangladesh Bank data, the banks and NBFIs made a total disbursement of Tk 33,473 crore in the sector during the period, falling from Tk 36,497 crore in the April-June quarter.

On the other hand, loan disbursements in the green finance sector by banks and NBFIs surged during the third quarter of this year (July-September).

The central bank data showed that the disbursement in the green finance sector stood at Tk 4,356 crore during the quarter, which is Tk428 greater than the previous quarter’. At the end of June quarter, the green loans disbursement totalled Tk3,928 crore.

Bangladesh Bank introduced green banking activities in 2009 and issued guidelines on green banking in 2011. It rolled out the sustainable finance policy in 2020.

According to the central bank data, 55 banks out of 61 and 13 NBFIs out of 34 in the country have had exposure in sustainable finance in the September quarter.

Moreover, 15 banks and 11 NBFIs have been able to fulfill their target in sustainable finance - 20% of total loan disbursement.

Bangladesh Krishi Bank (BKB) topped the chart among the banks when it comes to sustainable financing.

It disbursed 57.22% of its loans in sustainable finance sector, followed by RajshahiKrishiUnnayan Bank with 45.67%, AB Bank 32.06%, Eastern Bank 30.70%, Bangladesh Commerce Bank 30.15%, Premier Bank PLC 29.75%, Jamuna Bank PLC 28.19%, United Commercial Bank PLC 25.73%, Rupali Bank 25.17% and Habib Bank 23.14%.

The UAE-Bangladesh Investment Company hit the target among the NBFIs.

Among other NBFIs, Alliance Finance PLC 72.64%, Infrastructure Development Company Limited (IDCOL) 69.41%, CVC Finance Ltd 62.25% and Meridian Finance and Investment Ltd 51.30% met their disbursement targets.

On the other hand, 47 banks out of 61 and 12 NBFIs out of 34 have had exposure in green finance in the September quarter.

During the review quarter, 23 banks and 10 NBFIs have surpassed the target of green finance with 5% loans of the total term loan disbursement.

Total amount invested as green finance has been Tk3,604 crore by banks and Tk 751 crore by NBFIs.

State Bank of India, United Commercial Bank PLC  and Uttara Bank PLC were the top three banks in green finance in the three-month period.

The central bank defines sustainable finance as any form of financial service that includes investment, insurance, banking, accounting, trading, economic and financial advice integrating environmental, social and governance criteria into business or investment decisions for lasting benefits of both clients and society.

It includes green finance, sustainable agriculture, sustainable cottage, micro, small and medium enterprises, socially responsible financing, working capital and demand loan of green products, projects and initiatives, and priority green or eco-friendly products in the trading sector.