The relaxation of loan conditions for the state-owned commercial banks (SCBs), for the green transformation fund (GTF), will help the private sector exporters gain competitive advantages, ensure environmental compliance, and be sustainable, according to Business Initiative Leading Development (BUILD).
The Bangladesh Bank manages the GTF of $200 million and €200 million. The fund is intended to facilitate access to financing in foreign exchange by all manufacturers and exporters of all sectors to facilitate green or environment-friendly initiatives and harness green transformation.
According to the central bank, $89.69 million has been disbursed from the GTF so far.
The Bangladesh Bank has relaxed two conditions for the SCBs to participate in the GTF.
Firstly, the SCBs with more than 10% non-performing loans will be able to borrow from the GTF.
Secondly, the SCBs that have shortfalls in loan or investment provision, capital and liquidity will also be eligible to borrow from this fund.
Through the 7th Financial Sector Development Working Committee meeting in 2019 and the 3rd Sustainability and Green Growth Working Committee meeting in 2021, BUILD suggested that the Bangladesh Bank relax the loan policy for the SCBs for the GTF as many textile and non-textile firms are the clients of these banks.
The public-private dialogue platform hopes that the loan policy relaxation for the SCBs will expedite more loan disbursement in future.