BB unveils Tk 1000cr green refinance scheme for rural industries

Bangladesh Bank (BB) has introduced a Tk 1000 crore refinancing facility aimed at helping rural and local industries adopt environmentally sustainable technologies, offering loans at concessional rates to accelerate the country’s green transition.

The Sustainable Finance Department of the central bank announced the initiative in a circular issued on Monday. The new scheme has been created from the existing Tk 5000 crore Green Transformation Fund, with a dedicated allocation to support grassroots enterprises.

Under the programme, entrepreneurs will be able to access loans at a maximum interest rate of 5 percent. Participating banks will receive refinancing from the central bank at just 1 percent interest, creating a strong incentive for lenders to disburse green financing.

The fund will cover the import of environmentally friendly machinery as well as the purchase of locally produced green equipment. Eligible areas include renewable energy installations such as solar and wind systems, energy efficiency and water conservation projects, wastewater management, recycling and waste to energy initiatives, and improvements in factory safety and occupational health standards.

Individual borrowers may access up to Tk 5 crore, while banks can finance as much as 80 percent of the total import or procurement cost. Loan tenures will range from two to five years, with a grace period of up to six months.

To ensure environmental impact, the central bank has set a mandatory condition that at least 10 percent of the electricity used in financed projects must come from renewable sources, including solar power.

All state owned commercial banks are eligible to participate in the scheme. Private and foreign commercial banks must maintain a non performing loan ratio below 20 percent to qualify. Individuals or institutions classified as loan defaulters will not be permitted to access the facility.

Bangladesh Bank expects the refinancing scheme to strengthen the competitiveness of rural and small scale industries by lowering the cost of adopting green technologies. The initiative is also seen as a step toward advancing the country’s broader objective of building a sustainable and resource efficient economy.