Dhaka, Bangladesh, November 2, 2009
—IFC, a member of the World Bank Group, has formed a partnership with the Bangladesh Bank and local financial institutions to introduce systemic change in the way banks do business to increase investments in sustainable energy finance.
During an official visit to Dhaka, Rachel Kyte, IFC Vice President for Business Advisory Services, met with Bangladesh Bank’s governor and leaders of 40 financial institutions to discuss ways to make sustainable energy finance available to small and medium enterprises. The partnership is expected to help banks increase their sustainable energy finance portfolios and decrease their nonperforming loans by making them more aware of environmental risks.
Kyte also encouraged banks to apply for the Financial Times Sustainable Banking Awards to promote this innovative way of doing business. These awards were created in 2005 and now are viewed as leading global awards in the field of sustainable banking. They recognize financial institutions that have shown leadership and innovation in integrating social, environmental, and corporate governance practices into their operations. In 2008, three Bangladeshi institutions applied for the award—ASA, BRAC Bank, and Integrated Development Foundation.
“We welcome many more entries this year,” Kyte said. “Bangladesh has the potential to become a global leader in sustainable finance.”
Bangladesh Bank created a revolving fund to finance effluent treatment plants and biogas and solar projects. Financial institutions can use this fund to offer small and medium enterprises financing.
The South Asia Enterprise Development Facility, managed by IFC in partnership with the United Kingdom’s Department for International Development and Norad, is providing advisory support to Bangladesh Bank and the financial sector to train bankers on energy efficiency and renewable energy financing.
Under this project, IFC celebrated the first sustainable energy finance loan sanctioned in Bangladesh. IFC worked with Eastern Bank Ltd to process a loan to a dairy farm, Utility Animal House Ltd, to enable the farm to install a biogas plant that will generate 4.4 kilowatts of electricity daily from cow dung.
“This is a highly profitable investment that reduces emissions in two ways: by replacing diesel fuel with a renewable energy source, and by reducing methane emissions by properly managing farm waste,” said Afifa Raihana, IFC Project Officer. “This model can easily be replicated across Bangladesh.”
About IFC
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit
www.ifc.org
.
