ROLE OF CENTRAL BANKS & REGULATORS IN SUPPORTING

SUSTAINABLE FINANCE IN DEVELOPING COUNTRIES

Atiur Rahman
Professor, Department of Development Studies
Dhaka University
NUDGING THE BANKS BEYOND SHORT-TERMISM TO SERVE GOALS OF
SUSTAINABLE DEVELOPMENT

In developing countries financing is

generally- Conserving
Short-term in nature Nature
With large presence of state-owned
banks Financing
real
And supervisory challenges
Poverty for economy
None
Financial system or market alone is not
enough.

Prosperity for all

Markets have hands but not soul or
conscience
Post-Paris Climate Agreement & UN mandate for
financing SDGs requires financing real economy
BROADER DEVELOPMENTAL ROLE OF THE CENTRAL BANKS

Socially Policy innovations to confront climate

Responsible
vulnerabilities have already begun in some
developing countries

In Bangladesh, the central bank has come out

of its conventional narrow shell-
Central Priority areas are- Agriculture, MSMEs, Women
Bank of Entrepreneurs, Green Business and Industries
Bangladesh
Mandatory ERM guidelines for banks
Environment Sector specific policies & reporting
Inclusive -ally
Sustainable

We tried many small things, monitored what works or does not, and asked why.
BANGLADESH BANKS ROLE IN GREENING THE FINANCE SYSTEM

Green refinance
Besides greening its own energy supply, is Widening green schemes funded by
leading by examples and demonstrating initiatives with support Shariah-based banks
commitment- from WB, ADB & JICA (over 50 products now
available)
Green finance efforts funded by own
resources as well as support from Bangladesh
international development partners.
Bank
Using local bank liquidity for green
finance. Massive digitization Incentives for green
towards Paperless banking. Bank CSR
Promoting and awarding green banking Office and other funds for green
nationally. macro-prudential & initiatives undertaken
supervisory moves by CSOs
Macro-prudential and supervisory moves
to encourage green banking.
EARLY AND GRATIFYING OUTCOMES
Around 40 thousand projects received
green finance (worth USD 7 billion), mostly
through private banks.

As a result-
13 million people have access to off-grid
energy.

SHS reaching 4.5 million households

replaced kerosene worth USD 225 million
per year and saved 41 thousand m. ton of
firewood.

Solar-powered irrigation will save huge

amount of forex now spent on diesel.
JOURNEY AHEAD

Policymakers

Greening finance is a journey and not a

destination.

Central bank alone is not enough, highest Policy &

Public & Pvt.
level of policy ownership is needed. Regulators Implementation Entities
Ecosystem

Three fold role of public finance is crucial-

I. Financial support (funding & subsidies)
II. Market development (green bond)
III. Rules and regulations Citizens

Coordination and capacity building of the

policy and implementation ecosystem.
Lets move ahead, together, with resolve, curiosity, and humility