BB relaxes rules for financing coal-based power plants

The Bangladesh Bank (BB) on Tuesday relaxed its rules to facilitate lending for establishment of coal-based power plants and thus buy the dirty fuel to generate electricity.

The central bank said banks cannot lend more than 25 percent of their paid-up capital according to the bank company law.

The upper limit will not be applicable for the next five years for financing to coal-fired power plants, the BB said in a notification.

But, the central bank will determine the upper ceiling beyond 25 percent for the next five years, added the notification.

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.