Experts suggest govt, BB, FIs’ integrated approach

Dhaka,  Tue,  26 September 2017
Published : 25 Aug 2017, 01:06:27
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Experts suggest govt, BB, FIs’ integrated approach

Promoting sustainable financing
FE Report


Senior bankers and experts have urged the authorities concerned to ensure a coordinated and integrated approach among the government, the central bank and the financial institutions (FIs) to promote sustainable financing in the country.

This is now the right time for transformation from regulatory approach to collaborative approach for ensuring ownership of the market participators as well as for giving the right kind of impetus towards achieving sustainable finance, they added.

These observations came at a research workshop on 'Exploring Barriers of Sustainable Finance in Financial Sector and Policy Propositions to Remove the Barriers'.

The programme was held at Bangladesh Institute of Bank Management (BIBM) in the capital on Thursday with BIBM Director General (DG) Dr. Toufic Ahmed Chowdhury in the chair.

It was jointly organized by Sustainable Finance Department of Bangladesh Bank (BB) and BIBM.

"The coordinated approach will help make sustainable finance more effective and beneficial," said Shah Md. Ahsan Habib, leader of the research team, while presenting his draft findings at the workshop.

Sustainable finance should be promoted as an approach for having the right kind of balance between efficient banking operations in an environment of sound corporate governance as well as for addressing needs of the society, explained Dr. Habib, also a professor and director (training) of BIBM.

BB has been giving efforts and taking initiatives to make the finance of banks and non-banking financial institutions (NBFIs) sustainable.

"We want to make finance sustainable. It will make business sustainable, which will in turn make our development sustainable," BB Deputy Governor S K Sur Chowdhury said while speaking at the workshop as the chief guest.

He also said the fundamental challenge is to ensure that the financial system serves the transition to sustainable development, which needs to unleash future wealth creation while ensuring an inclusive development that protects and restores the environment.

"Policies, regulations and norms must shape more stable and efficient financial systems that are also more connected to the mainstream economy along with social and environmental challenges it faces," the BB deputy governor noted.

He also said integrating sustainable financing innovations into the evolution of financial systems provides the developed and developing countries with both short and long-term potential benefits.

The bankers have indentified lack of technical know-how about green products as a major barrier to effective governance of green finance, according to the draft survey report, prepared on the basis of data and opinions, collected from 33 banks and NBFIs.

The report also said the banks and NBFIs are facing several challenges in ensuring transparency. Around 27 per cent banks identified fake documentation by clients as a major obstacle in ensuring transparency.

"Wilful default and fund diversion are the major risks associated with transparency to ensure fund recovery properly," it noted.

Besides, insufficient knowledge in all levels of stakeholders is identified as the major barrier to promote sustainable financing in capacity development issue, according to the survey.

The policy propositions might contribute to addressing the social and environmental concerns, associated with financing by the local banks and NBFIs.

However, if the key areas of financing activities do not sustain or do not perform in a sound manner, the developmental roles of the banks and NBFIs for environmental and social risk management cannot be optimised, the report added.

Taking part in the discussion, Khondkar Ibrahim Khaled, A K Gangopadhya Chair Professor of BIBM, recommended developing a core fund in the central bank with allocations from the government.

BB and the commercial banks will also contribute to the proposed fund that will help minimize possible loss in the sustainable financing, the senior banker opined.

Helal Ahmed Chowdhury, Supernumerary Professor of BIBM, suggested all the stakeholders to work jointly under an umbrella for boosting sustainable finance across the country.

Muhammad Yasin Ali, Supernumerary Professor of BIBM, emphasised expediting financial literacy, saying that it should be introduced from primarily school level.

Among others, Shafiqul Islam, executive director of BB, Abdul Qaymum Mohammad Kibriya, faculty member of BIBM, and Manoj Kumar Biswas, general manager of BB, also spoke on the occasion.

    siddique.islam@gmail.com
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