Green and sustainable financing by banks and non-bank financial institutions (NBFIs) in Bangladesh experienced a slight decline in the first quarter of 2024 amid a turbulent economic climate.
According to Bangladesh Bank’s latest ‘Quarterly Review Report on Sustainable Finance of Banks and Financial Institutions (FIs),’ green loan disbursements decreased by 2.26 percent, falling from Tk 981.08 billion in Q4 2023 to Tk 959.35 billion in Q1 2024.
The combined green finance contributions from banks and NBFIs totaled Tk 72.39 billion in Q1 2024, a decrease of Tk 1.65 billion from the previous quarter. Specifically, banks invested Tk 59.67 billion, while NBFIs contributed Tk 12.71 billion to green finance during this period.
Despite the overall decline, the data showed a marginal 2.24 percent increase in green financing by banks and NBFIs in Q1 2024 compared to the previous quarter.
The banking sector remains a significant funding source for industries such as steel, paper, cement, and chemicals, all of which have substantial carbon footprints.
Similarly, sustainable finance also saw a decline in Q1 2024. The combined contribution from banks and NBFIs to sustainable finance was Tk 886.96 billion, down by Tk 20.07 billion from Q4 2023.
Despite this decline, overall sustainable financing increased slightly by nearly 2.21 percent during the period. In Q1 2024, banks invested Tk 853.37 billion, while NBFIs contributed Tk 33.59 billion.
All scheduled banks and NBFIs in Bangladesh have established dedicated sustainable finance units in compliance with regulatory requirements. This infrastructure is part of the Bangladesh Bank’s Sustainable Finance Policy, introduced in December 2020, which mandates that banks and FIs allocate 5 percent of their term loan disbursements to green financing and 20 percent to sustainable finance overall.
