First ever climate bank proposed

Staff Reporter  :

A private organisation is seeking licence to establish first ever climate bank proposed name ‘Green Bank Ltd’ in Bangladesh, sources said.

The basic objective of the bank is to preserve nature and address environmental issues that are looming large in the climate-vulnerable country.

The proposed bank is conceived in a global-standard climate-bank model with Tk 3.24 billion as its paid-up capital, they said.

Likely to be named ‘Green Bank Ltd’, the specialized bank may be set up under public- private partnership (PPP) or local and foreign partnership.

The Water and Essential (WE) organization has recently submitted the proposal to the Ministry of Environment, Forest and Climate Change (MoEFC) and it has suggested forming a committee to conduct a feasibility study or to ascertain whether or not the proposal is implementable.

The MoEFC has forwarded the request to the financial institutions division (FID) to take necessary steps.

A senior official concerned of the FID said, “We received a proposal sent by the MoEFC to set up a climate bank named ‘Green Bank’ in the country. The proposal is supposed to be forwarded to the central bank to scrutinize the proposal.”

Currently, there are 62 scheduled banks in Bangladesh. An executive director of the central bank, preferring anonymity, said last couples of months, the local banking sector has been vulnerable. “It has been suffering from different crises, mainly liquidity crisis.

For this, issuing licence for operating new bank in the country is quite impossible.”
Besides, the country’s economic size is not supportive of issuing licence for running a new bank.

Some 5.0 per cent to 7.0 per cent of the paid-up capital is retained by the entrepreneurial organization–Water & Essentials. The remaining 93 per cent to 95 per cent of the ownership is open to domestic, foreign investors.

Executive Director of the Institute for Inclusive Finance and Development (InM) Dr Mustafa K. Mujeri said, “The banking sector of the country is now passing through multiple difficulties.

So the central bank should look after how to recover the banking sector instead of issuing new licence.”