Banks get higher target for lending to green, sustainable ventures

Bangladesh Bank has revised the lending target for green and sustainable ventures as banks in the country recently achieved the previous benchmark in this regard.

As such, banks will have to disburse more loans for green and sustainable initiatives from next year as Bangladesh aims to reduce its greenhouse gas emissions and attain the UN's Sustainable Development Goals (SDGs) by 2030.

In a directive, the central bank yesterday said that banks must provide 40 percent of their net outstanding loans to green and sustainable ventures in the private sector from 2025.

Out of 40 percent, 5 percent of the fund must go to green initiatives, it said.

The directive comes as the overall financial sector crossed the previous benchmark for disbursing loans to green and sustainable projects. Until now, banks were given targets to provide 20 percent of their total loans to eco-friendly sectors.

Sustainable finance accounted for more than 30 percent of the total loan disbursement in the first half of 2024, said Chowdhury Liakat Ali, director of the central bank's Sustainable Finance Department.

"As the disbursement has increased, we have revised the limit to assist the government to meet the SDGs and Nationally Determined Contribution [NDC] targets," he added.

Bangladesh is aiming for net zero carbon emissions by 2050.