BB asks lenders to ensure third-party environmental assessment for financing infra projects

The Bangladesh Bank has directed all the banks and non-bank financial institutions to ensure a third-party assessment of probable environmental and social impact before financing any infrastructure project.

To this end, the central bank updated its guideline, titled The Environmental and Social Risk Management, and sent it to managing directors of financial institutions on Sunday.

"We released the guidelines for banks and financial institutions in 2017. Following the implementation experience of the guidelines, the central bank is now issuing its updated version to establish sectoral best practices," Bangladesh Bank Governor Fazle Kabir told the media.

He was hopeful that the banks and financial institutions would effectively implement the guidelines.

According to the updated guideline, a third-party environmental and social impact assessment, also known as ESIA, will generally be arranged by the client at its own cost and submitted with the loan application.

Banks or financial institutions will ensure that the third party is qualified on the basis of criteria set by the Bangladesh Bank for this purpose.

The guideline defined infrastructure projects are those related to power generation, supply, pipeline in power category; road, bridge, tunnels, airports, ports, railways, terminals and depots, inland waterways in transport categories; economic zones and export processing zones in industry category, fixed lines, transition lines and towers, satellites and others in communication; real estate, commercial buildings in land development categories and so on.