HSBC arranges Tk250cr sustainability-linked loan for BSRM

The Hongkong and Shanghai Banking Corporation (HSBC) in Bangladesh has structured the country's second sustainability linked loan for BSRM to help implement the steel manufacturer's sustainability agenda.

As much as Tk 250 crore in the form of working capital will be given to improve the energy efficiency of Bangladesh Steel Re-Rolling Mills (BSRM).

The deal was signed yesterday through a virtual session.

Under the credit facility, the working capital, which has already been given out to BSRM, one of the country's leading steel manufacturers, will be attached to the sustainability linked loan (SLL).

The SLL aims to improve the borrower's sustainability profile by aligning terms of conditions to the borrower's performance against pre-determined sustainability performance target (SPT) benchmarks.

For example, the interest rate under the relevant loan agreement may be reduced if the borrower achieves a pre-determined SPT threshold.

Aameir Alihussain, managing director of BSRM, told The Daily Star that they would reduce the use of energy by using latest technologies.

The existing technology will also be used properly to reduce energy consumption, he said.

Mohammad Ahmed Ali, executive director of the central bank, attended the event as chief guest.

Referring to the sustainability initiative of HSBC, Ali said the central bank's vision was to develop a sustainable banking framework and to integrate it into core business operations of banks and non-bank financial institutions through efficient and effective implementation of green banking and CSR.

"We are about to publish a contemporary sustainable finance framework in consultation with all the banks," he said.

Md Mahbub ur Rahman, chief executive officer of HSBC Bangladesh, said they have recently announced an ambitious plan to prioritise financing and investment that supports the transition to a net zero carbon emission.

"Like HSBC, we have always endeavoured to bring positive change to the industry and wider society. I am delighted to partner with the lender to join this innovative and future-ready solution," said Akberali.

Jonathan Drew, managing director of environmental, social, and corporate governance (ESG) solutions at HSBC, and Kevin Green, country head of wholesale banking at HSBC Bangladesh, were also present at the event.

Earlier this year, HSBC arranged Bangladesh's first SLL worth $118 million (approximately Tk 1,000 crore) for local conglomerate Square Group, incentivising their long-term renewable energy usage.