Bangladesh Bank has hiked the beneficiary level lending rate to 12 percent from existing 10 percent for financing in solar energy, bio-gas plant and effluent treatment plant (ETP) to encourage micro finance institutions (MFI).
The BB’s new move for its re-financing scheme to ensure green energy was in response to the demands of MFIs that the money regulator raise the rate to cut their interest loss.
In its latest circular on Sunday, Agriculture Credit Department directed all scheduled banks and MFIs to immediately make the new decision effective to ensure solar home systems in power hungry areas.
In case of partnership with banks, MFIs can charge a maximum of 12 percent interest rate, following reducing balance method, according to the circular. Financing to solar home systems under BB’s refinancing scheme will be treated as agro credit and those would be allowed to show as agro or rural credits in the statements sent by banks, it also said. Under the special scheme of Bangladesh Bank, banks get funds from BB at bank rate -- 5 percent -- to finance in green and environment friendly technologies. But most banks, especially the private ones, have no branches in the rural areas and they develop partnership with MFIs for the financing to target beneficiaries, BB officials said.
Banks usually charge 8 to 9 percent interest rates from the MFIs and they were claiming that they could not make profit after receiving the fund at that rate and providing it at 10 percent, BB officials added. The BB officials also hoped that the hike of lending rate will draw more attention from MFIs in financing to green energies.
The BB’s new move for its re-financing scheme to ensure green energy was in response to the demands of MFIs that the money regulator raise the rate to cut their interest loss.
In its latest circular on Sunday, Agriculture Credit Department directed all scheduled banks and MFIs to immediately make the new decision effective to ensure solar home systems in power hungry areas.
In case of partnership with banks, MFIs can charge a maximum of 12 percent interest rate, following reducing balance method, according to the circular. Financing to solar home systems under BB’s refinancing scheme will be treated as agro credit and those would be allowed to show as agro or rural credits in the statements sent by banks, it also said. Under the special scheme of Bangladesh Bank, banks get funds from BB at bank rate -- 5 percent -- to finance in green and environment friendly technologies. But most banks, especially the private ones, have no branches in the rural areas and they develop partnership with MFIs for the financing to target beneficiaries, BB officials said.
Banks usually charge 8 to 9 percent interest rates from the MFIs and they were claiming that they could not make profit after receiving the fund at that rate and providing it at 10 percent, BB officials added. The BB officials also hoped that the hike of lending rate will draw more attention from MFIs in financing to green energies.