The commercial banks have been advised to undertake sector-specific credit policy commensurate with the environmental aspect of different businesses.
“Investment in tannery like polluting industries should be different from the poultry industry,” Bangladesh Bank Governor Dr Atiur Rahman told a conference in Dhaka today.
Bangladesh Bank and International Finance Corporation jointly organised the day-long conference titled “International Sustainable Banking Conference 2013”.
The governor said holding positive mind set and attitude on environmental credit guideline is the biggest challenge for the bankers while quantifying environmental risk rating is another challenge.
“The mind-set amongst bankers should not be that environmental guidelines are damaging for growth of the business and a hindrance – it’s in your own interest too for long run growth of your profits,” he said.
“Capacity building on environmental issues is therefore required for the central bank and the commercials banks to develop structured green banking practices and green reporting initiatives (GRI).”
The green banking has been identified as one of the major drivers of sustainable economic growth in developing countries, he added.
In green financing, he said, the lenders routinely take up environmental impact assessment of investment proposals, factoring in environmental risks in their financing decisions.
He said the green financiers deny financing for environmentally risky undertakings lacking in adequate mitigation measures. “This environmental screening of borrowing proposals, green financing promotes adoption of new energy efficient.”
The governor said Bangladesh Bank advises the banks to finance solar energy, bio-gas plant, ETP and Hybrid Hoffman Kiln (HHK) in brick field under refinance programmes.
Bangladesh Bank introduced Tk2bn refinance line in FY2010 against bank loans for investments in solar energy, ETPs and biogas plants.