Bank-Insurance
Bangladesh, ADB Ink $400M Deal for Inclusive Climate Development
The Asian Development Bank (ADB) and the government of Bangladesh have officially signed a policy-based loan agreement amounting to US$400 million. This financial support is directed towards assisting Bangladesh in the implementation of its National Adaptation Plan for the period 2023-2050. Additionally, the loan aims to facilitate the achievement of Bangladesh’s Nationally Determined Contributions 2021 Update to the Paris Agreement, focusing on fostering climate-resilient and inclusive development.
Md. Shahriar Kader Siddiky, Secretary of the Economic Relations Division (ERD), and Edimon Ginting, ADB’s Country Director, signed the agreement on behalf of Bangladesh and ADB, respectively. The signing ceremony took place at the ERD in the capital.
This funding marks the initial phase of the broader $700 million Climate-Resilient Inclusive Development Program. Bangladesh, identified as one of the world’s most vulnerable nations to the adverse effects of climate change, experiences an annual average loss of around US$3 billion, as stated in a press release.
Edimon Ginting, ADB Country Director, emphasized the institution’s commitment to supporting Bangladesh in strengthening its climate resilience, transitioning to a low-carbon economy, mitigating greenhouse gas emissions, and integrating gender equality and social inclusion in climate actions.
The program’s objectives include creating a conducive institutional and policy environment to mobilize climate finance, prioritizing climate actions in the national development agenda, and facilitating government-led reforms in critical climate sectors such as agriculture, disaster management, transport and infrastructure, urban development, and energy.
Part of the initiative involves establishing the National Committee for Environment and Climate Change, headed by the Prime Minister, to holistically implement the government’s climate priorities across ministries. The program is set to actively support the operationalization of the Bangladesh Climate and Development Partnership, introduced at COP 28.
Furthermore, the program focuses on mainstreaming climate priorities in government planning and resource allocation, as well as mobilizing climate finance through instruments like green bonds and sustainable finance policies.
At the sectoral level, the program promotes climate-smart and resilient agricultural practices, particularly those beneficial for female farmers. It also supports the adaptation of solar irrigation pumps, the implementation of climate-resilient infrastructure design and planning, and the development of a regulatory framework for the adoption of electric vehicles, including the introduction of electric buses in public transport fleets.
In line with ADB’s increased climate financing ambition, announced in October 2021 to deliver $100 billion from 2019 to 2030, this program seeks to expand access to climate-focused technologies and mobilize private capital for climate finance.
In light of the current situation, Bangladesh Bank has mandated that all banks and financial institutions refrain from charging additional fees for late payments of credit card bills and loan installments.
The central bank issued this directive through two separate notifications on Wednesday, providing a significant relief measure to the financially burdened.
Borrowers and credit card holders who were required to make payments during the curfew and public holidays now have until July 31 to settle their dues. Bangladesh Bank has explicitly stated that banks and financial institutions are prohibited from imposing any extra interest, penalties, or late fees for installments or credit card bills due between July 18 and 25. Furthermore, no savings schemes shall be canceled for non-payment of installments during this period.
The central bank’s notification acknowledges that many borrowers and credit card users have struggled to meet their payment deadlines due to the prevailing circumstances.
Additionally, numerous depositors have been unable to make timely deposits into various savings schemes, including the Deposit Pension Scheme (DPS). To address these challenges, the new guidelines will be in effect from July 18 to 25, covering dues on loans, credit card bills, and savings scheme installments.
According to the directive, if the outstanding loan and credit card payments are settled by July 31, any accrued interest, penalty interest, additional interest, excess profit, or late fees will be waived. Similarly, if savings scheme installments are paid by July 31, no late fees or penalties will be imposed.
Moreover, any interest, penalty, or late fee already collected on loans, credit cards, or savings schemes must be refunded or adjusted, as per the Bangladesh Bank directive.
The Bangladesh Bank (BB) has announced an extension for the payment period against imports of industrial raw materials from 180 to 360 days, a measure now set to remain in place until December 2024. This policy, initially scheduled to end in June of this year, has been prolonged to facilitate trade transactions, according to a BB circular issued today.
“To support trade transactions, it has been decided to extend the policy support until December 31, 2024. The extended usance period will not apply to imports under EDF loans, as previously stipulated. All other relevant instructions remain unchanged,” the circular stated.
To ensure timely payment of salaries and bonuses to garment industry workers before Eid-ul-Azha, the branches of banks in key industrial areas will remain open on a limited basis on June 14, 15, and 16.
The Bangladesh Bank (BB) issued a notification stating that bank branches in Dhaka metropolitan, Ashulia, Tongi, Gazipur, Savar, Bhaluka, and Narayanganj will operate on these days to facilitate financial transactions for garment sector employees.
Typically, Friday and Saturday (June 14 and 15) are weekly holidays, and Sunday (June 16) will be closed for Eid. Despite these closures, the BB has mandated that banks in industrial regions stay open to manage the disbursement of wages and bonuses and facilitate the sale of export bills.
Additionally, bank branches in Chattogram metropolitan and industrial areas will also be open to support garment workers’ payments and the processing of export bills.
The BB has instructed banks to coordinate with local authorities to ensure adequate security at the branches during this period.
Eid-ul-Azha, one of the most significant religious festivals for Muslims, will be celebrated in Bangladesh on June 17.
