Bangladesh Bank SFD Circular No. 01: Green Transformation Fund for Rural and Local Entrepreneurs

Page No-1 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh Managing Director/Chief Executive Officer All Scheduled Banks Operating in Bangladesh Dear Sir, Subject: Providing Refinancing Facility from Green Transformation Fund for Rural and Local Industrial Sectors. Bangladesh Bank established a 5000 (five thousand) crore Taka (revolving) Green Transformation Fund (GTF) to accelerate sustainable growth in export-oriented and manufacturing industrial sectors, aiming to establish an environmentally friendly and sustainable economy in the country. From this fund, refinancing facilities in local currency (Taka) are available against bank financing for eligible customers after payment of import costs of capital machinery and spare parts. Along with ensuring sustainable growth in export-oriented and manufacturing industrial sectors, it is necessary to ensure the sustainability of rural and local industries. To this end, it has been decided to allocate 1000 (one thousand) crore Taka from the aforementioned 5000 (five thousand) crore Taka specifically for providing refinancing facilities to rural and local industries. The policy in this regard is as follows:

1. Fund Size: 1000 (one thousand) crore Taka (revolving).
2. Fund Source: Bangladesh Bank's own source.
3. Refinancing Facility Tenure: 2-5 years (depending on project type).
4. Objective of Fund Formation: Facilitating the purchase of conventional/environmentally friendly capital machinery and spare parts in rural and local industrial sectors under the following initiatives: a. Renewable energy; b. Energy efficiency; c. Water conservation and management; d. Waste management; e. Resource efficiency and recycling; f. Work environment improvement initiatives; g. Other areas as indicated by Bangladesh Bank from time to time.
5. Participating Financial Institution (PFI): Banks interested in obtaining refinancing facilities under this fund must execute a Participation Agreement (PA) with Bangladesh Bank (Director, Sustainable Finance Department, Bangladesh Bank, Head Office, Dhaka). Banks bound by this Participation Agreement will be considered Participating Financial Institutions or PFIs. PFIs must comply with the instructions outlined in circulars/circular letters issued by Bangladesh Bank from time to time under this fund. However, banks that have already executed a Participation Agreement (PA) for the Green Transformation Fund do not need to execute a new agreement. Date: 11 May 2026 28 Baishakh 1433 Sustainable Finance Department SFD Circular No-01

Page No-2 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd 6. Interest/Profit Rate Structure: 6.1) The interest/profit rate recoverable by Bangladesh Bank from PFIs will be 1% and 6.2) The maximum interest/profit rate at the customer level will be 5%. 7. Type of Refinancing Facility: Term loan/investment or a combination of current and term loans (Product Mix). 8. Grace Period: The grace period will be a maximum of 06 (six) months based on the PFI-customer relationship. 9. Eligibility for Refinancing Facility at Customer Level: 9.1) Refinancing facilities from this fund will be available against bank financing after payment of import costs of conventional/environmentally friendly capital machinery and spare parts, or against the purchase of locally produced machinery and spare parts, under the initiatives mentioned in paragraph 4; 9.2) Under this fund, the loan/investment-to-capital ratio for a borrower will be a maximum of 80:20 of the total import/purchase price. However, no single borrower will be eligible for a loan facility exceeding 5.00 (five) crore Taka under this fund; 9.3) To receive refinancing facilities under this fund, a minimum of ten percent (10%) of the total electricity consumed by the relevant project must be sourced from renewable energy. 9.4) Defaulting borrowers will not be considered for refinancing facilities. Before applying for refinancing facilities, PFIs must collect updated CIB reports of the relevant customer and their related entities and ensure that the customer is not a loan defaulter, and 9.5) Proper due diligence must be completed. 10. Eligibility for Refinancing at PFI Level: 10.1) All state-owned banks will be able to provide loans under the said refinancing facility; 10.2) For private and foreign banks, the classified loan/investment rate must be less than 20%; 10.3) Instructions regarding the maximum limit of loan/investment facilities for a single customer or group, including those of the Bank Company Act, 1991, and the instructions outlined in BRPD Circular No:1/2022 issued by Bangladesh Bank, must be followed, and 10.4) Compliance with all risk management policies issued by Bangladesh Bank from time to time must be ensured. 11. Schedule of Charges: For determining fees/charges against loans provided under this refinancing fund, the instructions outlined in the circular issued by Bangladesh Bank's Banking Regulation and Policy Department on June 10, 2021, regarding the "Schedule of Charges" for scheduled banks, as well as instructions from circulars/circular letters issued from time to time, will be applicable. 12. Documentary Checklist: 12.1) The relevant bank must submit the following documents when applying for refinancing to Bangladesh Bank: a. Customer's letter regarding availing loan/investment facility under refinancing; b. Customer's updated CIB report;

Page No-3 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd c. Copy of the relevant bank's Board of Directors' sanction letter in favor of the customer for availing refinancing facility from this fund; d. Customer and relevant project profile; e. Updated statement of loan/investment account and 12.2) To receive refinancing facilities, after approval of refinancing, the PFI must submit a Demand Promissory Note, Letter of Continuity, and Letter of Debt Authority signed by the Managing Director/Chief Executive Officer of the institution. 13. Refinancing Application Process: 13.1) The PFI must submit an application form signed by the Managing Director/Chief Executive Officer or an officer one level below him/her, along with the documents mentioned in paragraph 12, to the Director, Sustainable Finance Department, Bangladesh Bank, Head Office, Dhaka; 13.2) Before approving the refinancing facility, the Sustainable Finance Department will conduct a pre-inspection of the relevant project. Based on the inspection report, the submitted application, and related documents, the limit of the refinancing facility will be determined. 14. Refinancing Recovery Process: 14.1) The refinanced amount will be recoverable from the PFI on a quarterly basis according to a specific repayment schedule; 14.2) Installments due on the scheduled date, including interest/profit, will be debited from the current account of the relevant PFI maintained with Bangladesh Bank; 14.3) If a customer availing refinancing facilities is classified as adverse at any point during the approved period, the remaining principal amount will be debited in a lump sum from the PFI's current account without prior notification to the PFI, and 14.4) PFIs must maintain sufficient funds/balance in their current accounts held with Bangladesh Bank on the scheduled dates according to the repayment schedule. If, due to insufficient funds/balance in the PFIs' current accounts, arrears/installments of the refinancing facility cannot be recovered, the recoverable amount will be collected with interest/profit at a rate 3% higher than the interest/profit rate applied during refinancing, for the additional period, subject to fund/balance sufficiency. 15. Reporting and Monitoring: 15.1) PFIs must submit an updated statement of funds received for refinancing according to the attached format (on a quarterly basis and with a forwarding letter signed by the Managing Director/Chief Executive Officer) to the Director, Sustainable Finance Department, Bangladesh Bank, Head Office, Dhaka, within 15 (fifteen) days after the end of each quarter. PFIs that have executed a Participation Agreement (PA) but have not availed refinancing facilities will submit a nil statement; 15.2) If a PFI provides any false information after availing refinancing facilities or fails to submit quarterly statements on time, Bangladesh Bank will impose a penalty at a specified rate. 16. Other Conditions: 16.1) Banks will provide loan/investment facilities to customers by properly following their risk management policies and the instructions of the ESGM-related circular (SFD Circular No:03, dated June 26, 2022) issued by the Sustainable Finance Department, as well as adhering to procedures in light of other existing relevant rules and regulations of Bangladesh Bank regarding customer selection, sanctioning and disbursement of loan/investment facilities, execution of loan/investment related documents, proper utilization of loan/investment funds, and post-loan/investment monitoring. All responsibility for the recovery of disbursed loans/investments

Page No-4 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd will rest with the loan/investment disbursing bank. There will be no connection between the recovery of loans/investments at the customer level and the payment of installments of the related refinanced amount to Bangladesh Bank; 16.2) Islamic Shariah-based banks may provide investment to customers under this fund based on their approved investment methods without violating the above conditions. 17. The Sustainable Finance Department, Bangladesh Bank, reserves the right to add, subtract, or modify any conditions regarding the refinancing fund. 18. This circular is issued under the power conferred by Section 45 of the Bank Company Act, 1991 (as amended in 2023), and will be effective immediately. Yours faithfully, (Chowdhury Liaquat Ali) Director (SFD) Phone No: 9530320 E-mail: chowdhury.ali@bb.org.bd

Page No-5 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd Annexure Quarterly Report on Refinance/Loans Disbursed under GTF for Rural and Local Entrepreneurs as on ....................................

Sl. No.	Name of the Borrower	Type of Business	Sanction Date	Sanctioned Amount	Disbursed Amount	Outstanding Amount as of............	Overdue Installment Amount	Recovery during the Quarter	Cumulative Recovery as of ..........	Classification Status