Chanllanges in Green Banking System in Bangladesh

Bangladesh faces tremendous challanges internally in the sector of green banking which has
been hindering the growth.people are still talking about green banking rather than working. The
challenges in this sector can be classified in different categories.
Challanges and interferences in execution of Green Banking policies
1.Inability to come out of the pilot phase and slow progress.

2.Lack of capacity and capacity building across FIs and GB stakeholders.

3.Absesnce of sector specific environmental guidelines for financing.
4.Banks have been failing to meet the quota of maintaining 5% of total loan portfolio for direct
green financing.
5.Absence of sector specific environmental guidelines for financing.
6.Poor application of green financing policies among banks.
7.There is no co – ordination among the concerned agends.
Challanges in Accessing Green Finance from International Fund
1.Inadequate understanding of the Global Climate Financing arrangements.

2.Bad track record of the local agencies in project design, implementation and monitoring.
3.Too much dependence on Multilateral Implementing Entities.
4.Lack of internal capacity to prepare strong project proposals.
5.Inability to utilizes funds properly and finish projects in given timeframe.
Field – Level Green Financing Challanges
1.Most financers ignore the long -term effect of environment on financial outcomes.

2.Green projects bring returns far slower than polluting projects.

3.Bangladesh have failed to internalize environmental externalities.
4.operational and market risk associated with Green Projects increases the time to gain expected
return.
5.Green projects have a high transaction cost.
6.Lack of awareness among investors, customers, entrepreneurs.
7.Non appearance of an efficient green banking database.
8.Increasing number of Non- performing loans.
9.Lack of environmental disclosure of FIs as well as enterprises which increases search cost for
potential green investors.
10.Green products are not being offered to the public.
Recommendations :
Bangladesh has definitely been seeing a positive and steadier progress in Green Banking in the
past few years.The future of Green Banking seems positive however there are still many areas
Bangladesh need to improve on
1.A plan should be formulated to incorporate SMEs in Green Banking.
2.Practice of Green Accounting should be introduced.
3.An analytical and numerical framework should be introduced for companies to assess harmful
effects on the environment.
4.Sector wise policies should be implemented.
5.A separate unit should be set up regarding Green Finance within the Ministry of Finance
regarding Green Banking.
6.Bangladesh Bank can provide financing and technical assistance to FIs for adopting
technology.
7.More focus can be given to venture capitalists to Finance green projects.
8.Successful models like Agent Banking and Micro Finance can be incorporated in Green
Banking.
9.Bangladesh Bank should be stricter in monitoring Bank's and FI's GB activities.
10.Green Banking products like Green Bond,Green savings account etc. should be introduced.
11.Green Buildings should be promoted in corporate sector with low cost financing.
12. Stock Exchanges should adopt green and sustainable practices.
13. Concept of sustainable finance should be taught to Business Students.
14. Data related to green banking should be handled and kept sophisticatedly.
15.Bangladesh Bank should published the names of top performing Banks and FIs regularly.
Conclusion :
Green Banking refers to the promotion of environmentally friendly practices and the reduction of
the bank's carbon footprint.The primary goal of this banking concept is to improve the
conservation of the earth's environment, habitats and resources.Green Bank is a governmental or
quasi-public financial entity that works with the private market to promote the development of
clean energy technology using innovative financing approaches and market development
instruments.It involves two pronged approach.Firstly,green banking focuses on the green
transformation of internal operations of all banks.It means all banks should adopt appropriate
ways of utilizing renewable energy, automation and other measures to minimize carbon footprint
from banking activities. Secondly,all banks should adopt environmentally responsible financing :
weighing up environmental risks of projects before making financing decisions.Now when our
environment fight us back and there is an urgent need to create awareness and follow green
banking in today's business world of innovative technologies so as to make our environment
human friendly.We are forced to rethink and improve our ways of living to become more eco-
friendly. Green Banking system is the best solution in this situation. Green Banking if
implemented sincerely opens up new markets and avenues for product differentiation.Bangladesh
is one of the most climate change helpless countries to change climate in the world.Green
Banking prectices in Bangladesh are not at a satisfactory level.Government as well as every bank
should take initiatives in respect of green banking practices for protecting our environment
Government should also encourage the general people about the green banking practices. The
Central Bank should monitor or supervise commercial banks whether they are practicing green
banking or not.So, every bank has to participate and contribute to green banking practices in
today's extreme national and global banking competition.
Reference

https://www.researchgate.net/publication/346493154_Challenges_of_Green_Banking_in_the_Co
ntext_of_Bangladesh