BB sets lenders’ margin for green loans under refinance scheme
BI Report || BusinessInsider
Plummy Fashions Ltd, a green knit apparel manufacturing factory located in Narayanganj. This project follows the principles of the US “LEED” and the US Green Building Council. The factory has 3 acres of tranquil gardens. Photo: collected
Bangladesh Bank has set the margin for financial institutions (FIs) that will finance green products and projects under its refinance scheme.
BB fixed the margin through a circular issued on Sunday.
The central bank will charge FIs 1 percent less than the bank rate, which changes from time to time. Presently, the bank rate is 4 percent, which is considered the base rate in determining the rate of interest.
On the other hand, an FI has been allowed to charge a customer a margin of a maximum of 2 percent for a loan of five-year tenure. The margin will increase to a maximum of 2.5 percent for a loan up to eight years and 3 percent for eight plus years.
FI should ensure the equity contribution by the entrepreneur for financing under this scheme and the ratio of debt to equity will be determined by the PFI as per the relationship with its customers. But the minimum ratio of debt to equity would be 80:20.
BB introduced a refinancing scheme (revolving fund) of Tk 400 crore to offer a refinance facility against the Bank/Financial Institution’s finance to promote smooth financing in green products and projects in Bangladesh.