Banks increase investments in renewable energy projects
Banks have gradually increased investments in clean and renewable-energy technology, which was beyond conventional banking a few years ago.
Total investments in the alternative energy sector stood at Tk 71 crore till November 2011, according to Bangladesh Bank (BB) data. Of the investment, BB refinanced Tk 25 crore from its Tk 200 crore fund and the rest was lent by banks.
Trust Bank financed Tk 15 crore to set up 500 biogas plants in Gazipur, Manikganj, Natore, Tangail and Barisal in less than two years. The bank aims to take the total number of plants to 1,000 by June.
AB Bank is implementing a project to install solar panels for 2,700 families in the Sylhet region. Mutual Trust Bank has funded nine solar-powered pumps for irrigation across the country. Eastern Bank, which funded the highest amount of Tk 29 crore to a single project -- Rahimafrooz Renewable Energy, is now financing poultry farms to convert waste into gas and electricity in Cox's Bazar.
On biogas plants, Shah A Sarwar, managing director of Trust Bank, said, “Though it is going through trial and error, it is still workable.”
Leaving rural areas that account for 68 percent of Bangladesh's economy, out of lending programmes, does not make business sense to banks, he said.
Trust Bank runs this business on a 'four cow model'. The bank lends Tk 3 lakh to buy four cows and the borrowers can feed those cows and pay bank instalments by selling milk. In addition, slurry generated from the biogas plants can be used as organic fertiliser.
“We want to connect with the rural economy for sustainability and financial inclusion,” said Sarwar.
Mutual Trust Bank, which funded the first ever solar pump for irrigation in the southern district of Barguna in July 2010 for Tk 34 lakh, has now set up nine such pumps.
“All those pumps are running quite well,” said Anis A Khan, managing director of Mutual Trust Bank.
Khan said the bank also disbursed Tk 20 crore to set up solar panels in 900 off-grid union parishads (councils). The bank also launched loan products for green energy recently, he said.
Eastern Bank has given $3 million in loans to Rahimafrooz Renewable Energy to produce 18 megawatts of electricity. The bank has also financed the setup of effluent treatment plants at many textiles and garment factories. Despite that, Ali Reza Iftekhar, managing director of the bank, believes they are not doing enough to save the planet.
“We have to own the planet we live in,” said Iftekhar.
BB Governor Dr Atiur Rahman, however, is not happy with the pace the banks are financing green projects.
“Banks can appoint agents, if necessary, to reach out to more clients with renewable energy products,” said Rahman.
He said BB has given out only Tk 25 crore to banks so far, out of its Tk 200 crore scheme. The governor is surprised to see why the banks are not so interested in taking the fund at an interest rate of only 5 percent.