Bangladesh Sees Decline in Green and Sustainable Financing
Data from Bangladesh Bank shows a significant drop in green industrial investments and sustainable financing over a one-year period. Meanwhile, loan rescheduling in these sectors has notably increased according to the findings.
Recent data released by Bangladesh Bank indicates a noticeable decrease in green industrial investments and sustainable financing across the country. According to the central bank's statistics, the investment landscape for environmentally friendly and sustainable initiatives has faced various setbacks, contrasting with established regulatory targets.
Specifically, Bangladesh Bank guidelines dictate that banks must distribute at least 20 percent of their total loans toward sustainable sectors, while maintaining a target of at least 5 percent of total term loans allocated for environment-friendly or green projects. Despite these targets, sector-specific figures show a downward trajectory in actual funding deployment over the comparative periods.
Looking closely at the industrial sector, the central bank data reveals that at the end of the March quarter in 2025, total investment in green industries stood at 8 billion 763 crore 47 lakh taka. By the March quarter of the current year, however, this investment dropped significantly to 5 billion 196 crore 70 lakh taka. This represents a reduction of 3 billion 566 crore 77 lakh taka in green industry investments over the span of a single year.
A similar downward trend is visible in broader sustainable financing by banks and financial institutions. At the end of the March 2025 quarter, total investments in sustainable financing were recorded at 1 lakh 49 thousand 819 crore 5 lakh taka. Although the figure for the March quarter of the current year stood at 1 lakh 57 crore 2 lakh taka, the overall analysis highlights that sustainable financing investments actually decreased by 49 thousand 762 crore 3 lakh taka when measured against specific comparative metrics.
Loan recovery rates within these environmentally focused sectors have also witnessed a decline. During the March quarter, green financing loan collections yielded 5 billion 38 crore 9 lakh taka, whereas the collection amount during the corresponding period of 2025 was 5 billion 614 crore 66 lakh taka. This reflects a drop of 576 crore 57 lakh taka in green financing loan collections. Similarly, sustainable financing loan collections for the March quarter reached 52 thousand 377 crore 46 lakh taka, down from 77 thousand 947 crore 27 lakh taka in the previous year's corresponding quarter, marking a decrease of more than 25 thousand 500 crore 81 lakh taka.
In addition to falling investments and collections, loan rescheduling within green and sustainable sectors has risen. During the March quarter, green financing loans amounting to 411 crore 65 lakh taka were rescheduled, compared to just 53 crore 6 lakh taka during the same period in 2025, marking an increase of 358 crore 59 lakh taka in rescheduled green loans. For sustainable financing, the amount of rescheduled loans reached 3 thousand 724 crore 12 lakh taka in the current March quarter, up from 2 thousand 63 crore 27 lakh taka in the prior year's corresponding period, representing an increase of one thousand 660 crore 85 lakh taka.
Sustainable agriculture has likewise experienced a contraction in funding. Central bank statistics show that financing in the sustainable agriculture sector stood at 10 thousand 624 crore taka at the end of the December quarter in 2025. By the end of the March quarter, just three months later, sustainable agricultural financing dropped to 8 thousand 228 crore taka, demonstrating a decrease of 2 thousand 396 crore taka over a three-month period.
Commenting on these financial shifts, Helal Ahmed Joni noted that while increasing sustainable financing is inherently positive, the final destination of these funds is equally critical. He emphasized the necessity of ensuring that money flows directly into genuinely eco-friendly and sustainable projects. Supporting this perspective, Dr. Abdul Bayes stated that projects might be labeled as 'green' merely on paper to secure loans on easy terms, creating potential loopholes for misuse. He stressed that banks must thoroughly verify projects prior to loan disbursement and maintain regular monitoring of how the funds are utilized afterward.
