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  • Signing of loan agreement for "Green Finance Promotion Project" in Bangladesh (Private Sector Investment Finance): Contributing to climate-change mitigation and the improvement of environmental issues

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【SDGs logo】CLEAN WATER AND SANITATION

【SDGs logo】AFFORDABLE AND CLEAN ENERGY

【SDGs logo】CLIMATE ACTION

January 23, 2023

Signing of loan agreement for "Green Finance Promotion Project" in Bangladesh (Private Sector Investment Finance): Contributing to climate-change mitigation and the improvement of environmental issues

photoRooftop solar panels financed by BRAC Bank
photoSigning Ceremony

On January 10, the Japan International Cooperation Agency (JICA) signed a US$90 million loan agreement with BRAC Bank Limited (BRAC Bank), a Bangladeshi private commercial bank, and held a ceremony on January 12 to celebrate the signing. The funds from JICA will be utilized for projects that meet the green finance requirements of Bangladesh Bank (Bangladesh’s central bank) and will contribute to climate-change mitigation and the improvement of environmental issues in the country. Citibank, N.A. is the sole Arranger, coordinator, and agent, as well as a co-financier for the transaction.

With Bangladesh witnessing an increasing demand for energy resources to support its robust economic growth, the government is encouraging the development of renewable energy and energy-efficient equipment to alleviate its heavy dependence on domestically produced and imported natural gas. In addition to the country’s rapid economic development, wastewater from the sewing and leather industries—Bangladesh’s major industries—is being increasingly discharged into nearby rivers without adequate treatment due to insufficient infrastructure development. As a result, the country’s industrial wastewater treatment capacity is in urgent need of improvement.

Recently, the Bangladeshi government and Bangladesh Bank have been promoting investment in the green sector by setting clear definitions, providing guidelines, and demonstrating possible uses of sustainable finance funds, including green finance. As part of these efforts, Bangladesh Bank has developed and published the “Sustainable Finance Policy for Banks and Financial Institutions,” and encouraged financial institutions to expand their lending amount for the green sector (Note 1). This is the first loan transaction to be provided to a private commercial bank in Bangladesh and will support the green finance initiatives of BRAC Bank, which is a subsidiary of one of the largest NGOs in the world, BRAC.

This loan will contribute to climate-change mitigation and the improvement of environmental issues in Bangladesh by providing financial access to projects that work toward solving these issues, such as projects focusing on renewable energy, energy efficiency, and industrial effluent treatment. The loan will thereby also contribute to the achievement of SDGs (Sustainable Development Goals) Goals 6 (Clean water and sanitation), 7 (Affordable and clean energy), and 13 (Climate action). JICA will continue to support climate change projects not only in Bangladesh, but around the world, and will mobilize private sector funds for these projects.

(Note 1)The "Sustainable Finance Policy for Banks and Financial Institutions" set forth by Bangladesh Bank in December 2020 mandates that financial institutions in Bangladesh allocate at least 5% of their total term loans to green finance.

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