The Bangladesh government plans to issue a green bond to facilitate low-cost financing of environment-friendly and sustainable initiatives in Bangladesh, an official of Sustainable & Renewable Energy Development Authority said recently.

In Bangladesh, banks charge about 9% interest on lending to green projects under Bangladesh Bank’s Tk 200 crore revolving fund, formed in 2009 to give out low-cost loans for solar energy, biogas and effluent treatment ventures.

This interest rate needs to decrease significantly, and this is where green bonds come in.

Some 36 garment factories in Bangladesh have LEED certification, one of the most popular green building certification programmes used worldwide. But still, huge funds are needed to set up green factories and buildings, but interest rate is high and the payback period is less. Commercial banks can reduce the rate of interest if the BB cuts the rate.