BRAC Bank is set to issue a Tk1,000 crore green bond as the first bank in the country, according to a report by Desh Rupantar. Managing Director and Chief Executive Officer Tariq Refatullah Khan announced the plan during a press conference at a Dhaka hotel on Sunday, 25 October. The funds raised from this bond will go toward renewable energy, green buildings, and projects that improve energy efficiency in factories.
Tariq Refatullah Khan said the initiative aims to create affordable financing options for industrial businesses facing high energy costs. He also noted that the bank has received recognition as the top bank in the country for two consecutive years. The green bond will help expand the use of environment-friendly energy while supporting sustainable development across the economy.
Explaining the financial structure, the bank stated that the bond has a three-year term and a face value of Tk10 lakh. It is a senior unsecured, non-convertible, fully redeemable zero-coupon bond, meaning no periodic interest or coupon payments will be made. Investors will buy the bonds at a price lower than the face value and receive the full face value at maturity.
A discount rate of 7.50 percent puts the purchase price of one bond at about Tk8,04,961. Investors will receive Tk10 lakh at the end of the term, generating an estimated income of Tk1,95,039. This translates to a total potential return of 24.23 percent over the three-year investment period.
Corporate bodies, high net worth individuals, and general investors can apply for the bonds. Provident funds and gratuity funds may also invest, subject to fulfilling applicable rules and regulations. Applications will open every Wednesday, with electronic issuance planned before listing on the main market of the stock exchanges.
S and P Global Ratings provided an independent second-party opinion on the bond structure, which aligns with International Capital Market Association green bond principles. Income tax laws exempt zero-coupon bond earnings from income tax, subject to applicable conditions. Investors may also qualify for tax rebates after the bond lists on the main stock exchange market.
The background
Tariq Refatullah Khan announced the Tk1,000 crore green bond initiative during a press conference on Sunday, 25 October, at a Dhaka hotel. The announcement follows consecutive recognitions of BRAC Bank as the top bank in the country for two years. S and P Global Ratings also conducted an independent evaluation of the bond structure prior to the launch.
What it means
This initiative affects corporate investors, high net worth individuals, and businesses seeking affordable financing for energy efficiency. Investors can apply for the bonds through beneficiary owners accounts, while factories facing high energy costs gain access to funding for renewable energy adoption. Market participants should watch for the weekly application schedule and future stock exchange listing details to trade their investments.