Standard banking suffers due to lack of funds and capacity

Experts at a conference said Bangladesh lacks financial resources and capacity for sustainable finance and green growth.

They emphasized the need for government policy support and incentives to accelerate green growth within the nation.

The Bangladesh Institute of Bank Management organized a conference on „Sustainable Banking and Finance” at its auditorium in the capital on Saturday.

AKM Sohel, Joint Secretary, Economic Relations Division, said there is a significant funding gap to adapt to climate change.

He pointed out that $230 billion is needed to implement the National Adaptation Plan (2023-2050) and the current annual expenditure is just $1 billion.

At least $5 billion is needed to close this funding gap by 2030.

Sohal stressed that investing in climate change adaptation is non-negotiable, including both adapting to climate change and mitigating its effects.

He noted that the private sector in the country has not responded to sustained financing as expected.

He suggested that every bank should establish at least one climate unit and appoint a knowledgeable person to promote climate literacy.

Bangladesh Bank Deputy Governor Kazi Saidur Rahman expressed concern over the significant lag in utilization of funds received.

He stressed the need to change the public mindset, stressing that without this change, it would be challenging to achieve the goals through the financing mechanism.

BIBM Prof. Shah Md Ahsan Habib emphasized the need for a strategic framework, supportive regulatory framework, strong incentive system and capacity building arrangements to ensure the desired impact of green development activities.

BIBM Prof. Nehal Ahmed said sustainable finance is for better development through sound finance that is sustainable in each of its economic, social and environmental dimensions.

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He underlined the need for joint efforts by policy makers, academicians, researchers and practitioners in the banking and finance sector to promote sustainable financial practices in support of green growth.

Syed Mahbubur Rahman, Managing Director and Chief Executive Officer, Mutual Trust Bank Limited highlighted the lack of awareness among banks and customers about green financing and sustainable financing.

Mashrur Arefin, MD and CEO of Citibank emphasized that green financing and sustainable financing are relatively new requirements driven by demand.

Sustainable finance was still not a fundamental part of business strategy, which was an operational challenge for bankers, he said.

While banks can meet the 5% term loan requirement, banks are unable to meet 20% fixed funding of total loans, he said.

Mominul Islam, MD and CEO of IPDC Finance highlighted that non-banking financial institutions are outperforming commercial banks in terms of sustainable financing.

NBFIs, which are primarily small scale, face capacity constraints in sustainable financing. Many NBFIs, like some banks, struggle with sustainability risks, he added.

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