Investing in Renewable energy: A snapshot of Bangladesh Bank’s refinancing scheme

Bangladesh Bank recently has announced a revolving fund of 200 corer taka, which is generated from its own sources, to make easy finance on “Renewable energy & Environmental Friendly” sectors. It has already been notified to the other commercial banks to give easy loan in this regard- mainly in “Solar Energy”, Bio-gas” and “Effluent Treatment Plant”. This is an effort to boost investment in clean energy and tackle continuously growing environmental concern.

Here goes a quick review on the refinancing process and on other related issues:

1. Area of the Scheme:

Location: The urban and rural areas of Bangladesh.

Focus & Specification: Main focus is on “Households and Business Enterprise” to set Solar Energy Panel, Solar Photovoltaic Plant, Bio-gas Plant and Effluent Treatment Plant etc.

2. Sectors: The scheme is allowed for three different sectors

a) Solar Energy
b) Bio-gas
c) Effluent Treatment Plant.

A) Solar Energy:

If individual sets solar panel in his/her individual/joint apartments, business enterprise, cooperative societies or for familial purpose to generate electricity by taking the finance from banks in urban/rural areas, he/she will be able to get re-finance from this scheme. You can click here to tips for using home solar energy systems.

The following sub-sectors will also be granted under this scheme:

• Solar Home System
• Solar Mini Grid
• Solar Irrigation Pumping System
• Solar Photovoltaic Assembly Plant

The Capacity of Solar System: It ranges from 10Wp to 50KWp.

Loan Range: Loan ranges from 10,000-6, 00, 00,000 taka.

The Eligible entities:

• Single/Joint Family,
• Business Enterprise,
• Cooperative Societies

Interest Rate for Loan Holder:

• If Banks/Financial institutions provide loan directly to the consumers, interest rate will range from 8%-9%.
• If Banks/Financial institutions provide MFI linkage, interest rate will range from 11-12%.

Loan Payment Period & Interest Calculation:
Loan payment time ranges from 4 years to 10 years highest. Interest must be calculated in reducing balance method.

Re-financial Loan Payment Period:
Re-financial loan payment period ranges from 6 months lowest to 10 years highest.

Debt-Equity Ratio:
It will be based on the banker-consumer relationship.

B) Bio-Gas:

If loan is taken from banks to produce and use bio-gas in rural and urban areas, then the re-financial scheme will be applicable in this regard.

The following sub-sectors will be granted under this scheme:

• To Set Bio-gas Plant in Existing Cattle/Poultry Firm
• Combined Cattle Rearing & To Set Bio-gas Plant
• To Produce Organic Fertilizer from Slurry
• To Set Medium Bio-gas Plant

Loan Range:
Loan ranges from 25,000-25, 00,000 taka.

The Eligible entities:
Single/Joint Family/ Enterprise is eligible to get loan.

Debt-Equity Ratio:
It will be based on the banker-consumer relationship.

Interest Rate for Loan Holder:

• If Banks/Financial institutions provide loan directly to the consumers, interest rate will be 9%.
• If Banks/Financial institutions provide MFI linkage, interest rate will be 11%.

Loan Payment Period & Interest Calculation:
Loan payment time ranges from 3 months lowest to 5 years highest. Interest must be calculated in reducing balance method.

Re-financial Loan Payment Period:
Re-financial loan payment period ranges from 6 months lowest to 5 years highest.

C) Effluent Treatment Plant:

According to Environment Preservation Rules-1997, those industrial factories that produce liquid wastage during production process, they must be set up effluent treatment plant. Only these types of industrial factories will be eligible for this re-financial scheme.

The following sub-sectors will also be granted under this scheme:

• To Set Up Biologic ETP
• Combined Technology of Biological & Chemical to Set ETP
• Chemical ETP Transformation

Production Capacity of the Factory:
It will be lowest 5 ton to 10 ton highest per day.

Purification Capacity of ETP:
It ranges from lowest 500CM to 2,500CM.

Loan Range:

a)To Set Up Biologic ETP: Highest Four (4) Corers Taka
b) Combined Technology of Biological & Chemical to Set ETP: Highest Two (2) Corer s Taka
c) Chemical ETP Transformation: Highest One (1) Corer Taka

The Eligibility to get Loan:
Factories which produce liquid wastage according to Environment Preservation Rules-1997

Debt-Equity Ratio:
It will be based on the banker-consumer relationship.

Interest Rate for Loan Holder:
Interest rate will be highest 9%.

Loan Payment Period & Interest Calculation:
Loan payment time ranges from 6 months gross period to 5 years highest. Interest must be calculated in reducing balance method.

Re-financial Loan Payment Period:
Re-financial loan payment time ranges from 6 months gross period to 5 years highest.

Project Completion:
Within six months after taking the first loan installment, ETP must be set up and it is also confirmed by bank/financial institution.

(Related: You will be amazed to learn about institutions that provide easy loans for the growth of your business. Gbox Capital is one of the best option to avail for easy loans. Check them out today)

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