Dhaka, Sep 17 (V7N)- The government has launched a Tk 1,500 crore special financing program to accelerate the use of renewable energy across Bangladesh, offering low-cost loans for renewable energy installations at household, institutional and industrial levels.
Under the scheme, the government will provide loans to three participating institutions at an interest rate of just 0.5 percent per annum. However, the all-inclusive effective annual interest rate charged to beneficiaries, including all fees and charges, must not exceed 6 percent under any circumstances.
The decision was announced in a circular issued by the Macroeconomics Wing of the Finance Division under the Ministry of Finance on Monday, September 14.
The circular said Bangladesh's heavy dependence on imported fossil fuels for electricity generation has increased production costs, subsidy pressures and risks to energy security. The new financing initiative aims to provide long-term funding for renewable energy expansion on affordable terms.
The program is aligned with the government's National Renewable Energy Development Strategy 2026–2030, which targets increasing renewable energy's share of electricity generation to 20 percent by 2030. The strategy also emphasizes the rapid expansion of rooftop solar power.
Tk 1,500 Crore Fund
Of the Tk 1,500 crore allocated for the program, Tk 1,000 crore will be sourced by reallocating funds from the Tk 2,000 crore lump-sum allocation for Micro, Small and Medium Enterprises (MSMEs) in the 2026–27 budget. The remaining Tk 500 crore will come from the government's operating budget.
The funds will be disbursed through Infrastructure Development Company Limited (IDCOL), Bangladesh Infrastructure Finance Fund Limited (BIFFL) and Palli Karma-Sahayak Foundation (PKSF). Each institution will receive a government loan of Tk 500 crore.
Separate loan agreements will be signed between the Finance Division and each institution, detailing the loan amount, eligible sectors, repayment terms, reporting requirements, audit provisions and other conditions.
The government loan will have a 10-year tenure, including a one-year grace period. Participating institutions will begin repaying principal and interest from the month following the end of the grace period, according to the repayment schedule specified in their respective agreements.
Rooftop Solar to Irrigation Pumps
The financing will primarily support the installation, expansion and modernization of renewable energy technologies in household, institutional and industrial sectors.
Eligible projects include rooftop solar systems, net-metering connections, solar home systems, solar-powered irrigation pumps, and related equipment such as inverters, meters and battery storage systems.
Participating institutions may provide loans directly or through partner and associate organizations. However, they will remain responsible for complying with all conditions of the government circular and will bear the repayment risk associated with beneficiaries.
The institutions will determine loan products, disbursement methods, installment structures, beneficiary eligibility criteria and evaluation procedures based on proper due diligence and approval from their respective boards of directors.
The funds cannot be used to repay existing loans, renew loans or engage in loan “evergreening,” or for purchasing land or shares, personal consumption, general administrative expenses or transferring funds to other programs.
Participating institutions must maintain separate bank accounts and accounting codes for the scheme and establish board-approved operational procedures and management information systems. Loans must be disbursed digitally to the approved bank accounts of beneficiaries.
Before disbursing funds, institutions must properly verify beneficiaries and comply with relevant laws, regulatory directives, Know Your Customer (KYC) requirements, and measures to prevent money laundering and terrorist financing (AML/CFT).
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