Road to a Green Bangladesh: Financial Institutions Survey

Road to a Green Bangladesh: Survey on Financial Institutions

Road to a Green Bangladesh is an initiative to support Bangladesh’s commitment to climate action, SDG 13. Envisioning low carbon and inclusive transportation, Bangladesh is collaborating with UK PACT (Partnering for Accelerated Climate Transitions) to facilitate green finance and business-led sustainable transportation.

The initiative focuses on developing and piloting tests, undertaking techno-economic-commercial viability and providing support services, raising awareness, sensitizing and incentivizing gender and socially inclusive guidelines and engagement.

This project was led by Ricardo PLC with its consortium members LightCastle Partners, Infrastructure Development Company Limited (IDCOL), Policy Exchange Bangladesh, and Hivos Energia, and has been working to create awareness and promote EV adaptation in Bangladesh.

To gain deeper insights into the financial products available for micro, small, and medium-sized enterprises (MSMEs) and electric vehicle (EV) financing in Bangladesh, a survey was conducted among financial institutions in November 2021 as part of the program.

Key Highlights of the Survey:

Services to Women Entrepreneurs: Microfinance institutions primarily serve women, yet nearly half view loans to female entrepreneurs as commercially risky.
Perceived Risks: The main risk associated with lending to MSMEs and women-owned enterprises is commercial risk. For women-owned enterprises, inadequate documentation is the second most significant risk.
Low-Carbon Loan Products: Electric vehicles are deemed the second most appealing low-carbon loan product for financial institutions. The key barriers to loan provision for EV purchases are a lack of registration and supportive legislation.
Difficulties in Loan Applications: Insufficient collateral and documentation are the main challenges MSMEs encounter during the loan application process.
Success Factors in Loan Approvals: Stable cash flow, sufficient collateral, and proper documentation are seen as crucial for successful loan approvals. Financial statements are used to evaluate loan size.