Banks sustainable financing surges 171pc by Dec 23

Banks sustainable financing surged by 171 percent to Tk 87,826 crore by December 2023 compared with September 2023. On the other hand, NBFIs sustainable finance increased slightly to Tk 2,876 crore by December 2023 compared with Tk 1,176 crore in 2022.  

As per Bangladesh Bank (BB) quarterly review on sustainable finance of banks and non-bank financial institutions (NBFI), banks sustainable finance reached the current level from Tk 32,296 crore in September 2023 and Tk 39,987 crore in December 2022.

Banks sustainable finance increased significantly in the reporting period as they wanted to secure favourable sustainable rating, announced by the central bank each year.
The amount of banks investments in green projects also doubled as it reached Tk 6,408 crore at the end of December 2023 against Tk 3,604 crore at the end of September, 2023.

Green financing by NBFIs also increased to Tk 996 crore at the end of 2023 from Tk 751 crore in September 2023 and Tk 627 crore at the end of 2022.

The green finance accounted for 9.09 percent and 15.13 percent of the total loan disbursements by the banks and the NBFIs respectively. Fifty-four out of the 61 banks and 16 out of the 34 NBFIs had had exposure to green financing in the reporting quarter.

Sustainable finance by banks was 27.24 percent and by NBFIs was 14.55 percent of their total loan disbursements in 2023.

Banks financed the highest in sustainable CMSME for sustainable linked finance, which was Tk 17,966 crore, followed by sustainable agriculture sector Tk 9,331 crore, socially responsible financing Tk 5,533 crore in the October-December, 2023.

There was no investment in green bond, green Sukuk or impact fund by banks and NBFIs in the period. The total utilisation of climate risk fund in the January-March quarter was only Tk 14.47 crore.

The total outstanding balance of sustainable finance by banks was Tk 3.19 lakh crore and by the NBFIs Tk 17,328 crore at the end of 2023.

In October-December period, banks recovered Tk 39,660 crore and NBFIs Tk 1,535 crore from their disbursed sustainable loans. In the period, banks rescheduled Tk 1,858 crore and the NBFIs Tk 9.47 crore in sustainable finance.

Fifty-four out of 61 banks and 14 out of 34 NBFIs had had exposure to sustainable finance in the reporting quarter. In October-December, 2023, 20 banks and nine NBFIs were able to achieve the sustainable financing target, which is 20 per cent of their total loan disbursements.

During the quarter under review, 25 banks and 10 finance companies surpassed the target of green finance (5 percent) compared with total term loan disbursement. The BBs introduced Sustainable Finance Policy in December 2020.