SFD Circular Letter No. 03: Sustainability Rating of Banks and Finance Companies

Bangladesh Bank
Head Office
Dhaka.
Sustainable Finance Department
SFD Circular Letter No.: 01 Date:
09 May, 2024

26 Baishakh, 1431
Managing Director/Chief Executive Officer
All Scheduled Banks and Finance Companies Operating in Bangladesh Dear Sir, Subject: Amendment to the "Guidelines for Sustainability Rating of Banks and Finance Companies".

1. Reference is invited to SFD Circular Letter No. 04/2023, dated 22 October 2023. Through the aforementioned circular, the "Guidelines for Sustainability Rating of Banks and Finance Companies" were issued.

2. It has now been decided to update the existing "Guidelines for Sustainability Rating of Banks and Finance Companies" by adding new sub-criteria to make them more contemporary and consistent with newly added subjects related to sustainability rating.

(a) Sub-criteria under Environmental Risk Management:

S.No.	Sub-criteria	Score

1. | Does the bank have a dedicated department for environmental risk management? (Yes/No) | Yes/No
2. | What percentage of the bank's total credit portfolio is allocated to green/sustainable projects? (Yes/No) | Yes/No
3. | Has the bank established a committee for monitoring environmental and social risks? (Yes/No) | Yes/No
4. | Does the bank have a policy for non-performing green/sustainable loans? (Yes/No) | Yes/No
5. | Does the bank have a grievance redressal mechanism for environmental issues? (Yes/No) | Yes/No
6. | Does the bank conduct regular environmental audits? (Yes/No) | Yes/No

(b) Sub-criteria under Social Responsibility:

S.No.	Sub-criteria	Score

1. | Percentage of credit allocated to priority sectors | Yes/No
2. | Social responsibility policy | Yes/No

Bangladesh Bank
Head Office
Dhaka.
Sustainable Finance Department

(c) Sub-criteria under Governance:

S.No.	Sub-criteria	Score

1. | Percentage of green/sustainable loans in total loans/disbursements | Yes/No

2. The sub-criteria/criteria mentioned in Paragraph-2 shall be considered an integral part of SFD Circular Letter No. 04/2023 and shall be included in the sustainability rating assessment for December 2024.

3. This directive is issued under the powers conferred by Section 45 of the Bank Company Act, 1991, and Section 41(2)(d) of the Finance Company Act, 2023, and shall come into force immediately.

Yours faithfully,
(Chowdhury Likhat Ali)
Director (SFD)
Phone: 9530320
E-mail: pofice.dsr@bb.gov.bd