Green Finance Projects in Bangladesh

Wpfreeware 6:49 AM Green Finance Project

Sustainable Green Finance in Bangladesh

The Sustainable Refinance Scheme is part of Bangladesh Bank’s ongoing efforts to integrate sustainable practices into the financial sector, encouraging investments that lead to long-term environmental benefits and economic resilience.

Bangladesh Bank introduces various sustainable refinance schemes to promote green and sustainable finance from time to time. These schemes are designed to support environmental sustainability, renewable energy, energy efficiency, and other green initiatives.

Here are some key types of sustainable refinance schemes offered by Bangladesh Bank:

  1. Green Products/Projects/Initiatives (GPPI)
  2. Green Transformation Fund (GTF)
  3. Technology Development/Up-gradation Fund (TDUF)

Green Products/Projects/Initiatives (GPPI)

Refinancing schemes for environment-friendly green products, projects, and initiatives are financial programs designed to support and promote sustainable development. These schemes typically provide favorable loan terms to individuals, businesses, and organizations that undertake green initiatives.

Key Features of the GPPI Scheme

  1. Objective of the Fund: Acceleration of financing to Eco-friendly Green Products/ Projects/ Initiatives
  2. Interest Rate of the Loans: The Interest rate is at 5% to the customer level (PFI 1%). In case of Solar irrigation at 3%
  3. Refinancing types of loan: Term Loan/Investment
  4. Tenure of Loan: Duration 3-10 years (for Affordable Green Housing maximum 20 years)
  5. Grace Period: Some cases maximum 1 year
  6. Loan/Investment Amortization Schedule: Fixed Principal Payment Method
  7. Debt-Equity Ratio 70 : 30

Documentary Checklist

  1. Up to date CIB report
  2. Sector wise expenditure of the project and authentic documents in its favour,
  3. Project Profile
  4. Project Inspection Report by Bank/Financial Institution (where applicable)
  5. Factory Layout
  6. Environmental clearance issued by the Department of Environment
  7. Fire license issued by Fire Service and Civil Defense Authority
  8. Factory License from Directorate of Factory and Establishment Inspection
  9. Technical Report from Sustainable and Renewable Energy Development Authority (SREDA)
  10. Directorate General of Health Services
  11. Office of The Chief Inspector of Boilers
  12. Other required certificates for the concerned product/enterprise/project (if applicable)
  13. Any other documents as mentioned in the Circular

List of the Green Products/Projects/Initiatives

    Part-1: Renewable Energy

  1. Solar Home System
  2. Solar Pico Grid
  3. Solar Micro Grid
  4. Solar Park
  5. Solar Irrigation Pumping System
  6. Solar Photovoltaic (PV) Assembly/ Manufacturing Plant
  7. Solar Water Heater Assembly/Manufacturing Plant
  8. Solar Nano Grid
  9. Solar Mini Grid
  10. Net Metering Rooftop Solar System
  11. (Solar Pump for Drinking Water)
  12. Solar Cooker Assembly/ Manufacturing Plant
  13. Solar Air Heater & Cooling System Assembly/Manufacturing Plant
  14. Solar Powered Cold Storage
  15. Establishment of Biogas Plant using following raw materials:
    (i) Agricultural residues*,
    (ii) Community based wastes**,
    (iii) Industrial wastes*** (15-18)

  16. Small size biogas plant: 1.2, 1.6, 2.0, 2.4, 3.2 and 4.8 cubic meter gas production per day.
  17. Medium size biogas plant: capacity varies from 6 to 25 cubic meter gas productions per day.
  18. Large size biogas having capacity 26 cubic meter gas production to 200 cubic meter gas production per day and above.
  19. (Integrated Cow Rearing and Setting up of Bio-gas Plant)|
  20. (Wind Power Plant)
  21. (Hydro Power Plant)
  22. Part-2: Energy & Resource Efficiency

  23. Installation of Energy Auditor Certified machineries including boiler in industries for following purposes:
  24. i. Energy Efficiency
    ii. Resource Efficiency
    iii. Heat and temperature management
    iv. Air ventilation and circulation efficiency
    v. Waste Heat Recovery System/Unit

  25. Auto sensor power switch assembly Plant
  26. Energy efficient Cook Stove Assembly Plant
  27. LED Bulb/Tube Manufacturing/ Assembly Plant
  28. Energy Efficient Lime Kiln
  29. Improved Rice Parboiling System
  30. Part-3: Alternative Energy

  31. Pyrolysis Oil/Bio-crude Oil/Bio Fuel Manufacturing Plant
  32. Lithium Battery Manufacturing Plant
  33. Part-4-5: Liquid & Solid Waste Management

    Installation of Effluent Treatment Plant (ETP)

  34. Biological ETP
  35. Combination of Biological and Chemical ETP
  36. Conversion of Chemical ETP into Combination of Biological and Chemical ETP
  37. Central ETP
  38. Waste Water Treatment Plant
  39. (Sewage Water Treatment Plant)
  40. Methane Recovery and Power Production from Municipal Waste Plant
  41. Compost Production from Municipal Waste Plant
  42. Hazardous Waste Management Unit/Plant
  43. Medical Waste Management Unit/Plant
  44. E-waste Management Unit/Plant
  45. Sludge Management Unit/Plant
  46. Part-6: Recycling and Manufacturing of Recyclable Goods

  47. PET Bottle Recycling Plant
  48. Plastic Waste (PVC, PP, LDPE, HDPE,PS) Recycling Plant
  49. Paper Recycling Plant
  50. Recyclable Bag Manufacturing Plant
  51. Recyclable Poly Propylene Thread and Bag Manufacturing Plant
  52. Battery (Solar/Led Acid/Lithium Ion) Recycling Plant
  53. Part-7: Environment Friendly Brick Production

  54. Compressed Block-Brick
  55. Foam Concrete Brick
  56. Other Environment Friendly Brick Kiln Project (HHK, Tunnel Kiln, and other eco-friendly bricks)
  57. Part-8: Green/Environment Friendly Establishments

  58. Establishment of Certified Green Industry
  59. Establishment of Certified Green Building
  60. Establishment/Installation 'Green Featuring' in the Buildings/Industries
  61. Affordable Green Housing
  62. Part-9: Green Agriculture

  63. Forestation (Social/integrated/Agro)
  64. Organic Farming
  65. (Rooftop Agriculture/Vertical Farming or Gardening)
  66. Fish cultivation in cage
  67. Biofloc fish cultivation
  68. (Integrated Recycling System (IRS) fish cultivation/Bottom clean fish cultivation)
  69. Financing in coastal aquaculture
  70. (Floating system cultivation, Hydroponic cultivation/farming)
  71. Part-10: Green CMSME

  72. Financing in cottage Industry
  73. Part-11: Socially Responsible Finance (SRF)

  74. Community Investment for addressing Climate Resilience and Disaster Management in a concessional rate
  75. Financing in Green/Clean transportation projects (cycles, green vehicles those run on wind, solar energy, electricity, bio-fuels etc.)
  76. Financing in Sand-witch Panel (Floating or Movable Houses in coastal areas or climate vulnerable zone)
  77. Financing in Govt. approved Eco-tourism project
  78. Part-12: Miscellaneous

  79. Safety and work environment of factory related projects (Production of Vermicompost
  80. Production of Vermicompost
  81. Production organic fertilizer from slurry
  82. Jute Products Manufacturing Industry

Important Links:

Green Transformation Fund (GTF)

The Green Transformation Fund (GTF) in Bangladesh is a specialized financing mechanism aimed at promoting sustainable industrial practices and environmental conservation. The GTF focuses on encouraging industries to adopt green technologies and energy-efficient processes to reduce their environmental footprint. Here is an overview of the GTF process in Bangladesh:

Key Features of the GTF:

  1. Objectives of the Fund: To facilitate purchase of green/eco-friendly capital Machinery and Equipment in export and manufacturing oriented industries
  2. Interest Rate of the Loan: at 5% to the customer level (PFI 1%)
  3. Tenure of Loan: Duration 5-10 Years (depending on the project's capacity)
  4. Grace Period: Maximum 1 Year
  5. Debt-Equity Ratio 70 : 30
  6. Refinancing types of loan: Term Loan/Investment

Documentary Checklist

The following documents are to be submitted while applying for refinancing with Bangladesh Bank:

  1. Customer's letter regarding taking loan/investment under refinancing facility;
  2. Customer's updated CIB report
  3. Project Profile and customer’s profile associated projects;
  4. Energy Audit Report prepared by a certified Energy Auditor of Sustainable & Renewable Energy Development Authority (SREDA) to be submitted
  5. Any other documents as mentioned in the Circular

Objectives of the GTF

To facilitate purchase of green/eco-friendly capital machinery and equipment in export and manufacturing oriented industries under the following initiatives and activities:

  1. Water use efficiency in wet processing;
  2. Water conservation and management;
  3. Waste management;
  4. Resource efficiency and recycling;
  5. Renewable energy;
  6. Energy efficiency;
  7. Heat and Temperature management;
  8. Air ventilation and circulation efficiency;
  9. Work environment improvement initiatives;
  10. Other areas as indicated by Bangladesh Bank from time to time

Eligibility for refinancing facility at Customer Level:

  1. Under the initiatives mentioned in Objectives of the GTF, after payment of the import price of environmentally friendly capital equipment and parts, refinancing facility will be provided from this fund against bank financing or purchase of locally produced equipment and parts;
  2. The debt equity ratio of a borrower under this fund shall be maximum 70:30. However, no single borrower will be entitled to a loan facility of more than Tk 200 (two hundred) crore under this fund;
  3. Defaulting borrowers will not be considered for the refinancing facility. Before applying for refinancing facility updated CIB report from concerned institutions ensure that the customer is not in default;
  4. Refinancing facility under this fund will not be considered if 2 consecutive Export Bills are fully or partially non-repatriated (up to the prescribed time as specified in Guidelines for Foreign Exchange Transactions-GFET) and
  5. Due diligence should be done

Important Links:

Technology Development/Up-gradation Fund (TDUF)

The Technology Development/Up-gradation Fund (TDUF) in Bangladesh is a significant initiative by the Bangladesh Bank aimed at enhancing the technological capabilities of export-oriented industries. This fund is part of a refinancing scheme designed to help businesses modernize their operations and remain competitive in the global market.

Key Features of the TDUF :

  1. Object of the Scheme: To modernize the export-oriented industries along with technological development.
  2. Beneficiaries of Fund: Highest Priority Sectors and Special Development Sectors under Export Policy 2018-2021.
  3. Interest Rate of the Loan: at 2% - 3% to the customer level (PFI 1%)
  4. Refinancing types of loan: Term Loan/Investment
  5. Interest Calculation: Reducing balance method
  6. Tenure of Loan: Duration 3-10 Years
  7. Grace Period: Maximum 1 Year
  8. Debt-Equity Ratio 70 : 30

Documentary Checklists

    Following documents of the customer are to be presented:
  1. Customer's updated CIB report;
  2. Customer's letter regarding taking loan/investment under refinancing facility;
  3. Customer's application for loan/investment;
  4. Copy of the sanction letter;
  5. Term Loan/Investment Agreement;
  6. Repayment schedule of term loans/investments;
  7. Updated Financial statement of loan/investment account;
  8. Related expenditure statement and other documents;
  9. Project Profile and customer profile of associated projects;
  10. Technical report including estimated valuation/project cost evaluated expert Institute registered/approved by the concerned Ministry/Institution/Department of Govt. or experts from recognized universities of Bangladesh for industrial modernization and technological development by relevant sector and
  11. Any other documents as mentioned in the Circular

Technology Development/Up-gradation Activities/Initiatives:

  1. Main production machineries/technology of the concerned industry;
  2. Energy efficient or renewable energy related machinery/technology;
  3. Business Process Reengineering/Business Process Automation Machineries/Technologies;
  4. Machinery/Technology related to Operations Management;
  5. Waste Management Machineries/Technology;
  6. Air handling machinery/technology;
  7. Thermal Management Machineries/Technology;
  8. Machinery/Technology related to work environment (fire management, health care) management;
  9. Machinery/Technology related to water use management;
  10. Modern technology related to human resource development and management and
  11. Modern automation of accounting, inventory management, marketing, sales and security management processes Machineries/Technology.

Above 11 activities/initiatives from the list of 32 (thirty-two) highest priority and special development sectors mentioned in the Export Policy 2018-21 that will be considered for the funding.

List of the 32 Hightest Priority and Special Development Sectors cited in Export Policy 2018-21

Highest priority sectors

  1. High Value Added Readymade Garments, Denim, Man Made Fibre and Garment Accessories
  2. Software & IT Enable Services, ICT Products
  3. Pharmaceutical products
  4. Plastic products
  5. Footwear (leather, non-leather and synthetic) and Leather products
  6. Jute products
  7. Agro-Products & Agro-Processed products
  8. Ship & Ocean going fishing trawler
  9. Furniture
  10. Home Textile, Home Decor & Terry Towel
  11. Home Furnishing
  12. Luggage
  13. Active Pharmaceutical Ingredients (API) and Laboratory Reagents.

Special Development sectors

  1. Diversified Jute Products
  2. Electric & Electronic products
  3. Ceramic products
  4. Light engineering products (including Auto –parts, Bicycle, Motor cycle, Battery)
  5. Value added frozen fish
  6. Papor (Food)
  7. Printing and packaging
  8. Rough Diamond & Jewelry
  9. Paper & paper products
  10. Rubber & Rubber related Products
  11. Silk products
  12. Handicrafts
  13. Handloom products including Lungi
  14. Coconut Shell
  15. Photo Voltaic Module (Solar energy)
  16. Cashew nut (Raw and Roasted);
  17. Live and Processed Crab
  18. Toys
  19. Agar

Important Links:

Click the link for more related information:
  1. Sustainable Finance Policy
  2. Sustainable Finance Department of Bangladesh Bank
  3. The Green Growth Knowledge Partnership (GGKP) Website

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