Banks are reluctant to disburse green loans due to lack of awareness, found a study of the Bangladesh Institute of Bank Management (BIBM), in a major setback for the Bangladesh Bank's green banking initiative.
In 2011 the BB issued a guideline for green banking, where it instructed banks to disburse 5 percent of their loans for green projects.
But the BIBM study found green loans accounted for only 0.5 percent of the banks' loan portfolio. Of the green financing, the biodiversity sector got a very negligible amount, with the majority going towards solar power projects.
“Only 8 to 10 percent banks give loans to the biodiversity sector,” said the report titled 'How to incorporate biodiversity issues in green banking in Bangladesh'.
The study, which was jointly conducted by the BIBM and Bangladesh Poush, a nongovernmental organisation, was launched yesterday at the BIBM auditorium in Dhaka.
Raising awareness among bankers is more important than issuing a guideline to boost green banking, said SM Moniruzzaman, deputy governor of the BB, who graced the event as the chief guest.
Toufic Ahmad Choudhury, director general of BIBM, called upon the banks to put more focus on green banking.
Bureaucracy in financing green banking products should be removed to promote the sector, he added.
“Once banks were not aware of green banking, but the situation has changed in the last several years,” said Shah Md Ahsan Habib, director of the BIBM.
Raising awareness is a must to increase financing to the biodiversity sector, he added.
All banks should come forward to finance green projects, said Anis A Khan, managing director of Mutual Trust Bank.
Banks should give attention to green banking for the sake of the environment, said Helal Ahmed Chowdhury, supernumerary professor of BIBM.
“Banks should come forward to protect biodiversity,” he added.
Mohammed Tajul Islam, associate professor of BIBM, presented the findings of the research at the event.