Bangladesh Bank lifts cap to loan coal-based power plants

The Bangladesh Bank (BB) in a directive has withdrawn the lending limit for coal-based power plants aiming to increase power generation.

As per the directive, banks can lend money to set up coal-based power plants as required for power generation in the next 5 years.

Md. Ali Akbar Faraji, director of banking regulation and policy department, issued the notification as Bangladesh is struggling to run gas-based and diesel-run power plants amid rising oil prices because of the Russia-Ukraine war.

It says the banks can provide necessary loans for setting up coal-based power plants, including the purchase of land, import and purchase of machinery, expenses related to the installation of machinery, and maintenance of coal-based power plants.

As a result, the calculation of lending 25 percent of the reserved capital to get bank loans will not be effective for the next five years.

In July, Bangladesh Bank gave such instructions for six months.