SFD Circular No. 03: Refinance Scheme for Green Factory Building and Green Industry

State Bank of Bangladesh Deputy Governor Dhaka. 08 June 2026 ESDD Circular No. 03 Date: -------------------- 25 Joishtho 1433 To: Chief Executive/Head of Department Banks and Finance Companies.

Whereas, ‘Refinance Scheme for Green Factory Building and Green Industry’.

In line with the implementation policies formulated in accordance with the Perspective Plan of Bangladesh, National Sustainable Development Strategy, Intended Nationally Determined Contributions (INDCs), Bangladesh Delta Plan 2100, and Sustainable Development Goals (SDGs), a refinance scheme has been launched to accelerate green products, projects, and technologies. Under this scheme, a total of 70 green products and projects are included. Furthermore, to accelerate green products and technologies under the ‘Green Factory Building’ and ‘Green Industry’ categories, it has been decided to establish a Refinance Scheme of Tk. 1,000 (One Thousand Crore). The relevant policies are as follows:

1. Scheme Size: Tk. 1,000 (One Thousand Crore) (Internal).

2. Source of Funds: State Bank of Bangladesh's own funds.

3. Tenure of Refinance Facility: 3-10 years. This refinance facility can be provided in installments, but no installment shall exceed 1 (one) year.

4. Eligible Categories for Refinance: Refinance facility shall be provided under the following categories to accelerate green products/projects/technologies: 4.1. Establishment of Green Industry 4.2. Establishment of Green Factory Building

5. Participatory Financial Institution (PFI): For availing this refinance facility under this scheme, the Bank/Finance Company (PFI) must execute a Participatory Agreement with the State Bank of Bangladesh (Deputy Governor, State Finance Department, State Bank of Bangladesh, Dhaka). Participating Banks and Finance Companies under this agreement shall be considered as Participating Financial Institutions (PFI). Under this category, the SBP may exclude any PFI from the scheme based on its own assessment.

6. Interest/Musharaka Rate: 6.1. The interest/musharaka rate payable by the PFI to the State Bank of Bangladesh is 2%. 6.2. The interest/musharaka rate charged by the PFI to the borrower shall not exceed 5%.

7. Purpose of Refinance Facility: Under this scheme, refinance facility may be provided for Term Loan/Investment for the products/projects/technologies listed in Annexure 4.

8. Eligibility for Refinance Facility:

   8.1. PFI Criteria: (a) Banks and Finance Companies operating under the jurisdiction of the State Bank of Bangladesh may provide loans under this refinance facility; (b) For Banks and Finance Companies with classified loans/investments, the proportion of such classified loans/investments shall not exceed 10%. However, if the Performance Function is consistently rated '2' or better, the State Bank of Bangladesh may evaluate and allow this proportion to be up to 15%; (c) The maximum proportion of loans/investments under a single borrower or group shall be determined in accordance with the Bank Company Act, 1991 (Amended 2023) - Circular No. 01/2022 or other relevant SBP circulars/guidelines; (d) In granting loans/investments, the PFI must conduct due diligence regarding the borrower's credit history, facility utilization, and repayment. It must also ensure compliance with the Bank's own credit policies, credit limits, and the State Bank of Bangladesh's issued State Finance Policies, Guidelines on Environmental and Social Risk Management (ESRM) for Banks and Finance Companies, Guideline on Climate Risk Management for Banks and Finance Companies, and Guideline on Sustainability and Climate-related Financial Disclosure, as well as other relevant SBP circulars/guidelines.

   8.2. Borrower Criteria: (a) Loans/investments previously sanctioned by the Bangladesh Bank shall not be eligible for refinance under this scheme. Before availing refinance, the PFI must obtain a CIB Report from the borrower confirming that the borrower has no outstanding loans/investments with the Bangladesh Bank; (b) For the products/projects/technologies under this scheme, the borrower must contribute Equity Contribution as per the full project implementation plan (including local components). The PFI must ensure compliance with the Bank-Borrower relationship guidelines. The Debt/Investment-Equity ratio for the project loan/investment shall be at least 70:30, meaning at least 30% of the total cost of the project or facility must be equity; (c) The maximum proportion of refinance shall be determined by the PFI. However, the maximum refinance facility available to a single borrower under this category shall be Tk. 100.00 (One Hundred Crore). The maximum proportion of refinance determined by the State Bank of Bangladesh shall be final.

9. Required Documents:

   9.1. The PFI must submit the following documents to the designated Bank for availing refinance: a. Application for loan/investment under the refinance facility along with the borrower's profile; b. CIB Report of the borrower; c. Sanction letter of the designated Bank for the loan/investment under this category; d. Proposal of the designated project; e. Sanction letter of the loan/investment; f. Confirmation that the applied project is listed under this category; g. ESDD Certificate; h. Other required documents and information as per ESDD Circular No. 01/2021; and

   9.2. Along with the application for refinance facility, the PFI must submit a Demand Promissory Note, Letter of Continuity, and Letter of Debit Authority signed by the Chief Executive/Head of Department of the PFI.

10. Refinance Application Process:

10.1. The PFI must submit the application along with the required documents listed in Annexure 1 and Section 9.1 to the Deputy Governor, State Finance Department, State Bank of Bangladesh, Dhaka, through one level of its hierarchy. 10.2. The PFI must submit the application via the E-Refinance Software. 10.3. Since no specific criteria/guidelines have been issued for Green Factory Building/Green Industry, the project must be certified by Leadership in Energy and Environmental Design (LEED)/Excellence in Design for Greater Efficiencies (EDGE)/Building Energy Efficiency & Environment Rating (BEEER) A_green, Affordable, and Resilience Certification for Habitats (GreenARCH). If certified, the relevant certificate/letter must be submitted. For foreign certification bodies, local collaboration must be established. 10.4. Before approving the refinance facility for designated projects, the State Finance Department must conduct a pre-verification of the designated project. Based on the verification report, submitted application, and related documents, the proportion of the refinance facility may be determined.

11. Refinance Recovery Process:

11.1. The date of receipt of the refinance fund shall be considered as the disbursement date. Interest/musharaka shall be recovered according to the prevailing interest/musharaka rate, and the designated PFI must inform the State Bank of Bangladesh regarding the utilization of the funds. 11.2. The refinance facility shall be recovered in the same manner as the loan/investment sanctioned to the borrower. The designated PFI must inform the State Bank of Bangladesh in advance regarding the utilization of the recovered interest/musharaka. 11.3. The PFIs must submit quarterly utilization reports of their funds to the State Bank of Bangladesh. If the due interest/musharaka for the due period is not available, the PFI must recover the interest/musharaka + Bank rate from the due period.

12. Settlement of Interest/Musharaka for Loans/Investments under Refinance Facility:

12.1. Under this scheme, the interest/musharaka for the refinance facility shall be recovered according to the Fixed Principal Method. Similarly, the interest/musharaka for such loans/investments shall be payable by the borrower to the PFI according to the Fixed Principal Method. 12.2. The borrower shall not charge any Hidden Expenses or other charges/fees/interest/musharaka other than the interest/musharaka rate mentioned in Section 6. However, applicable/customs duties levied by the government may be charged. 12.3. The PFI must settle the interest/musharaka for the refinance facility received from the borrower and the interest/musharaka for the refinanced amount to the PFI on the date of refinance receipt. 12.4. The designated PFI must settle the interest/musharaka for the designated loan/investment to the State Bank of Bangladesh in advance before the borrower settles it. The borrower shall not charge any additional charges/fees for the settlement of the loan/investment. 12.5. The borrower shall not be able to offset the liability received from the State Bank of Bangladesh against the refinanced amount.

13. Submission of Refinance-Related Information:

13.1. The PFI must submit the utilization certificate of the received refinance fund (forwarding letter signed by the Chief Executive/Head of Department or the authorized Chief Executive of the Chief Executive/Head of Department) to the Deputy Governor, State Finance Department, State Bank of Bangladesh, Dhaka, within 30 (thirty) days according to Annexure 2. If the PFI has not availed any refinance facility in a quarter, it must submit a 'NIL' certificate for that quarter. The State Bank of Bangladesh may conduct verification of the utilization of the refinanced loans/investments through its own function or as necessary. 13.2. If the PFI does not submit the utilization certificate of the refinanced amount, the State Bank of Bangladesh may intervene in accordance with relevant laws and guidelines and take necessary actions. 13.3. In the event of non-compliance with the following conditions, the PFI shall be liable to pay the interest/musharaka/charges (PFI interest/musharaka rate + Bank rate) on the refinanced amount in advance, and the respective PFI may be subject to action under the State Bank of Bangladesh Order, 1972, Bank Company Act 1991 (Amended 2023), and Finance Company Act, 2023: (a) If the utilization of the refinanced loan/investment is found to be false in the verification conducted by the State Bank of Bangladesh; and (b) If the loan/investment of the borrower availing the facility under this refinance scheme is not recovered in the manner prescribed, and the State Bank of Bangladesh is not informed immediately. 13.4. The PFIs must make the refinance-related information available to the public through the Chief Executive and other means.

14. Due Diligence and Verification of Loans/Investments to Borrowers:

14.1. The due diligence of the respective loan/investment, the state of the borrower's credit, and the recovery of the loan/investment shall remain the responsibility of the respective PFI; 14.2. For project implementation, the PFI must ensure compliance with the requirements issued by the Sustainable and Renewable Energy Development Authority (SREDA), Directorate General of Health Services, Office of The Chief Inspector of Boilers, and other regulatory bodies before sanctioning the loan/investment.

15. The Annexures (Annexure 1 and 2) to this Circular shall be considered part of this Circular.

16. Banks and other institutions are advised not to ignore the above and to invest in the respective categories according to their own policies.

17. The State Finance Department of the State Bank of Bangladesh shall supervise the implementation of this refinance scheme and its categories.

18. This Circular is issued under Section 45 of the Bank Company Act, 1991 (Amended 2023) and Section 41 of the Finance Company Act, 2023. No other action shall be taken.

Respectfully, (Kazi Riazat Ali) Deputy Governor (ESDD) Copy: 9530320 -4- Page 4/4