BB rolls out eco-friendly industrial loans It launches Tk1,000cr green fund

Bangladesh Bank (BB) has introduced a special Tk1,000 crore refinancing scheme to promote environmentally sustainable and green industrial infrastructure across the country.

The initiative, part of the central bank’s Green Transformation Fund, aims to encourage local and rural entrepreneurs to invest in eco-friendly machinery and modern industrial equipment. Previously, the Tk5,000 crore fund was primarily focused on export-oriented and manufacturing sectors, but this new allocation targets domestic industries.

According to a circular issued on Monday, the fund will operate as a revolving facility, allowing recovered loans to be reinvested in the same sector to maintain ongoing financing support for sustainable industrial development.

Under the programme, participating banks can provide term loans or a combination of term loans and working capital financing through a “product mix” arrangement. Loan tenures will range from two to five years depending on the project, with a grace period of up to six months for repayment based on the borrower’s relationship with the bank.

The interest rate for borrowers has been capped at 5 percent, while banks will receive refinancing from Bangladesh Bank at a concessional rate of 1 percent, enabling financial institutions to lend at lower costs. Individual borrowers can access a maximum of Tk5 crore under the scheme, and at least 10 percent of electricity used in financed projects must come from renewable energy sources.

To qualify, entrepreneurs must purchase environmentally friendly machinery and maintain a debt-to-equity ratio of no more than 80:20. Borrowers with default histories are ineligible, and private or foreign banks seeking refinancing support must maintain a non-performing loan ratio below 20 percent.

Bangladesh Bank will recover principal and interest from participating banks quarterly through automatic deductions from their current accounts. Banks failing to maintain sufficient funds at the scheduled recovery date will incur a 3 percent penalty interest rate.

To ensure transparency and accountability, the central bank has imposed strict monitoring and reporting requirements. Participating banks must submit detailed quarterly reports to the Sustainable Finance Department within 15 days of each quarter’s end, even if no loans are disbursed. Banks providing inaccurate information or failing to report on time will face penalties.