Green financing shrinking

Proper measures needed to increase awareness among stakeholders

Published : 07 Feb 2021 09:39 PM | Updated : 08 Feb 2021 01:16 AM

Green financing plays a substantial role in maintaining the ecological balances to businesses. However, in our country the investment in green enterprises, eco-friendly industries, businesses and other projects followed a downward trend as disbursement of low cost loans by banks has decreased by 7.26% in the July-September period of 2020.

To boost the investment in this sector and overcome the current situation the Central Bank has to deal with a host of challenges that are holding back the initiatives to promote green loan finance from taking off. One of the main reasons for which green finance is shrinking is because of lack of proper knowledge or attention among both the bankers and respective stakeholders. This is resulting in very low or inadequate investment demand for green projects.

Banks and  financial institutions should be

 instructed to take steps to provide regular

 training to their staff to boost green financing

The Central Bank should lead with initiatives to introduce green finance in the local market, with a clear vision to adopt green banking in the financial sector. They should instruct the financial institutions under their authority to set up sustainable finance units. This will help to achieve more effective green portfolio organizations. Now to promote green financing, banks and financial institutions should be instructed to take steps to provide regular training to their staff to boost green financing. Government should take measures to increase awareness levels among the stakeholders of green enterprises. Loan interest rate should be very minimal as this will encourage new investors to invest more in green enterprises.

In Bangladesh, even though some policy considerations are obvious towards attaining sustainable development goals, there are occasions for creating a proper environment for financial institutions, to play a catalytic role in promoting green finance currently and in the foreseeable future.