Credit flow under BB refinance scheme gains momentum
Rezaul Karim ( published on 27th May,2013, Financial Express)
Disbursements of funds for financing projects in some areas of renewable energy, with the support of the refinancing facility of the Bangladesh Bank (BB), witnessed a satisfactory level of increase since its inception, thanks to initiatives taken by the country's central bank in tandem with those of a number of its scheduled banks, sources said.
Under the facility or scheme, funds were disbursed at a faster pace for projects to generate biogas and install solar photo-voltaic (PV) module assembling plants, Hybrid Hoffman Kilns (HHKs) and effluent treatment plants (ETPs), the sources added.
According to the latest available data, the Bangladesh Bank (BB) provided funding support to the tune of Tk 853.54 million until December 2012 compared to Tk 251.23 million (25.123 crore) at December-end in 2011, to the scheduled banks under its refinancing scheme.
This made it possible for the banks to disburse more credits to their clients operating in relevant areas of renewable energy. Of the aggregate credit flow, an amount of Tk 23.90 million was disbursed for the purpose of solar irrigation, Tk 102.84 million for installation of solar home systems, Tk 262.70 million for biogas generation, Tk 90.40
million for setting up ETPs, Tk 124.80 million for HHK and Tk 248.80 million for solar PV module assembling plants, the BB statistics showed.
The disbursements for the purposes of solar irrigation and installation of solar home systems was, however, markedly slower than what was earlier expected because of lack of awareness of the people about green banking across the county, officials said.
The BB launched the Green Banking Refinance Scheme involving Tk 2.0 billion on August 03, 2009 to provide funds as credits by banks to the renewable energy projects in the country against the backdrop of chronic power outages around that time.
Under the special scheme, banks and financial institutions get the support under the central bank's refinancing scheme at a 5.0 rate of interest.
"The people are not aware of our refinancing facility. They even do not know about, from where the credits for related projects are available. This is the main cause for the low level of fund disbursement in this particular area. But disbursements of credits for the purposes of biogas generation and installation of solar PV module assembling plants and HHKs are increasing faster than those in other areas," a high BB official told the FE.
The scheme was undertaken in line with the government's plan to meet 5.0 per cent of the total demand for electricity from green energy by 2015 and 10 per cent by 2020.
The BB officials said the central bank in May last year increased the lending rate on credits under the green banking projects. It was done to encourage and facilitate the commercial banks to step up further their credit disbursement operations relating to such loans.
The BB allowed the raising of the lending rate on loans for biogas and cattle-rearing to 11 per cent from the earlier level of 10 per cent.