Bangladesh’s banking and financial sector witnessed a significant rise in green and sustainable finance during the October–December 2024 quarter, signaling strengthened institutional commitment toward environmental and socially responsible investments. According to Bangladesh Bank, green financing by banks and non-bank financial institutions (NBFIs) rose by an impressive 27.2%, reaching Tk 86.46 billion—up from Tk 67.97 billion in the previous quarter.
This growth aligns with the central bank’s long-standing efforts, dating back to 2011, to institutionalize sustainable finance through policies that encourage inclusive green growth. The central bank’s sustainable finance policy has broadened the scope of environmentally responsible lending, encompassing green finance, sustainable agriculture, CMSME development, and socially responsible finance.
Notably, the sector also demonstrated substantial progress in broader sustainable financing, which rose by nearly 39.9% quarter-on-quarter. Total sustainable finance reached Tk 1.48 trillion, up from Tk 1.05 trillion. This surge reflects a strong rebound after a dip in the July–September quarter, where both green and sustainable finance volumes had declined from their April–June levels.
A noteworthy performance was seen from 34 banks and 8 NBFIs, which exceeded the regulatory target of allocating at least 5% of term loan disbursements to green finance. Additionally, 30 banks and 13 NBFIs met or surpassed the target of 20% of total loan disbursement towards sustainable finance in 2024, underscoring a shift toward more responsible lending practices.
Despite the overall positive trend, the report also reveals areas of concern. There was no recorded investment in Green Bonds, Green Sukuk, or impact funds during the review period, suggesting untapped potential in these innovative financial instruments. Moreover, as the banking sector continues to support high-emission industries such as cement, power, and textiles, the challenge remains in aligning financial flows with low-carbon development goals.
In summary, while Bangladesh’s financial institutions have made commendable progress in scaling up green and sustainable finance, the absence of investment in specialized green instruments and the continued financing of carbon-intensive sectors indicate that more strategic interventions are needed. Continued regulatory guidance, targeted incentives, and a broader investment toolkit will be critical in sustaining momentum and achieving long-term environmental impact.
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