Refinance Scheme for Environment-Friendly Products, Projects and Initiatives (Bangladesh Bank)
The scheme is designed to support and encourage banks and financial institutions to finance green products, projects, and initiatives. Under the scheme, Bangladesh Bank provides a revolving refinance facility so that participating financial institutions (PFIs) can offer lower-cost loans to end-users for eligible green purposes. It identifies dozens of green product categories (around 94) which qualify under the scheme, covering areas such as renewable energy, efficient machinery, environmental management, and resource conservation. The goal is to build a more sustainable future by reducing environmental harm while supporting economic growth.
Five-Axis Transformation via the Refinance Scheme
Data: The scheme uses data and criteria to define eligible green product categories and tracks uptake by banks and financial institutions to monitor usage of the refinance facility and assess environmental impact.
Capacity Building / Technical Assistance:
Banks and PFIs are guided on how to structure green product financing, evaluate projects, and comply with the scheme’s eligibility and risk requirements.
Technology / Machinery: The scheme promotes the adoption of environmentally friendly technologies—such as energy-efficient boilers, effluent treatment plants, solar installations, etc.—by making finance more affordable.
Finance: Through this refinance facility, PFIs can access funds at a low rate (base rate) from the central bank, which they can then lend to eligible borrowers. PFIs may add a modest margin but still offer more favourable interest rates than typical market rates for green investments.
Policy: The scheme is embedded in Bangladesh Bank’s sustainable finance policy framework. It encourages regulations and policy environments that incentivise green investments, environmental risk management, and sustainable banking practices.
Strategic Impact & Value Proposition
Environmental Benefits: Supporting the transition toward cleaner production, lower emissions, improved water use, waste treatment, etc., across industries participating in green finance.
Economic Growth: Helps industries and enterprises invest in green technologies, improving competitiveness, reducing long-term costs, and aligning with global sustainability trends.
Increased Access to Green Finance: Makes green products and projects more financially feasible for borrowers who otherwise might find costs prohibitive.
Risk Mitigation: By centralising part of the financial risk in the refinance scheme and setting eligibility and monitoring requirements, the scheme reduces risk for PFIs and encourages broader adoption.
Systemic Change: Embeds environmental considerations in the finance sector, promotes green banking practices, and helps shift the financial system’s orientation toward sustainable investment.