Bangladesh Bank’s Green Transformation Fund (GTF), established to promote environmentally friendly technologies and equipment in the industrial sector, is facing serious setbacks. Despite a two-tiered security system, loopholes were exploited, and oversight faltered amid profit-driven mismanagement.

Bangladesh Bank launched the refinancing scheme in 2016 with $210 million, later adding €200 million. Under the programme, export-oriented and manufacturing industries could borrow from commercial banks to purchase green technology, while the banks themselves received refinancing benefits. Field inspections were intended to ensure proper project implementation.

In practice, many inspections turned into recreational trips for bank officials, with some posting photos online, while several funded projects exist only on paper.

Several companies under Chattogram-based business group S Alam received substantial loans. Infinea Spinning Mills borrowed over $21 million from Social Islami Bank Limited (SIBL) at 1.31% interest, while sister companies took additional loans worth $2.75 million and €3.3 million. These loans are now non-performing. In 2021, Unitech Composite Limited, also under the group, borrowed €1.26 million from Islami Bank Bangladesh, but repayment is uncertain.

Bank insiders allege the loans were approved under direct influence from the then Awami League government. Currently, S Alam is reportedly absconding, the companies are non-performing, and banks cannot recover funds from Bangladesh Bank due to a lack of dollars. Collateral values fall short of the original loans, and the 70% project financing rule has not safeguarded the banks.

Allegations also implicate some Bangladesh Bank officials in facilitating flawed verification processes, reportedly certifying inspections as satisfactory. Attempts to contact Infinea Spinning Mills for comment were unsuccessful.

SIBL confirmed that the projects were initially viable but have become non-repayable following government changes. Managing Director Shafiuzzaman stated that efforts to recover loans through asset sales continue, but full repayment remains uncertain. Bangladesh Bank has now assumed operational responsibility for the affected banks under government consolidation.

Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said the central bank would investigate any lapses in supervision and hold responsible officials accountable if evidence of negligence emerges.

Experts warn that the mismanagement of these green financing loans poses a serious threat to the banking sector and undermines Bangladesh’s broader environmental financing objectives.