The Japan International Cooperation Agency (JICA) signed a US$90 million loan agreement with BRAC Bank Limited (BRAC Bank), a Bangladeshi financial institution, on January 10, 2023, and held a ceremony on January 12 to commemorate the signing. The funds from this loan will be used to finance projects that meet the green finance requirements of the Central Bank of Bangladesh, and will contribute to climate change mitigation and improvement of environmental issues in Bangladesh.
Bangladesh’s demand for primary energy is increasing along with its robust economic growth, and the country is introducing renewable energy and energy-saving equipment to improve its existing heavy dependence on natural gas. In addition, the country’s rapid economic growth has led to an increase in factory effluent from the sewing and leather industries, which are the country’s main industries, but this effluent is being discharged into nearby rivers without adequate treatment of toxic substances.
In recent years, the Bangladesh government and central bank have been promoting investment in the sector by providing definitions, guidelines, and possible uses of funds related to sustainable finance, including green finance. As part of this effort, they are expanding lending in accordance with the “Sustainable Finance Policy for Banks and Financial Institutions,” which was developed and published by the Bank of Japan (see Note 1). The policy is to expand lending in accordance with the “Sustainable Finance Policy for Banks and Financial Institutions” formulated and published as part of the policy (Note 1). This loan is the first loan to a private financial institution in Bangladesh, and will support the green finance initiatives of BRAC Bank, one of the country’s leading private financial institutions, which is affiliated with BRAC, one of the world’s largest NGOs.
This loan will contribute to climate change mitigation and improvement of environmental issues in Bangladesh by improving access to finance for Bangladesh’s efforts to solve environmental issues such as renewable energy, energy conservation, and industrial wastewater treatment, thereby contributing to SDGs Goals 6 (Safe Water and Sanitation for All), 7 (Energy for All and Clean Development), and 13 (Climate Change Solutions). JICA will continue to support the climate change mitigation efforts in Bangladesh and other countries around the world, and will mobilize private-sector funding for the sector.
(Note 1) The “Sustainable Finance Policy for Banks and Financial Institutions” set forth by the Central Bank of Bangladesh in December 2020 requires financial institutions in Bangladesh (Note 1) The “Sustainable Finance Policy for Banks and Financial Institutions” set forth by the Central Bank of Bangladesh in December 2020 requires financial institutions in Bangladesh to allocate at least 5% of their total certified loans to green finance.
© Source JICA