In order to meet the globally agreed standards for structural improvements, and worker rights and safety in the RMG sector of Bangladesh, the Asian Development Bank (ADB) will reportedly provide US$30 million loan to BRAC Bank to finance construction and upgrading of RMG factories in the country.
Also Read – Shifting of textile firms from China increasing Bangladesh’s textile value chain: ADB
“Bangladesh has been taking steps in conjunction with the international community to make its factories safer and improve conditions for workers, but there is a substantial cost and a need for long term funding that is not readily available from current sources,” underlined Investment Specialist in ADB’s Private Sector Operations Department Biao Huang, adding, “This loan, with a 5-year tenure, will help meet the need for longer term finance currently unavailable from local banks and international capital markets, and will be used exclusively by BRAC Bank to finance socially and environmentally sustainable projects.”
According to a press release, pertaining to the development, ADB and BRAC Bank have signed the loan agreement, under which the loan amount will also be used to build effluent treatment facilities in the textile and garment industry, as many factories in the country still reportedly operate without effluent treatment plants (ETPs).
Also Read – Energy Efficiency Financing Loan for garment sector launched
According to reports, transforming the factories in line with the compact and other agreements would require substantial outlays, with the cost estimated at around US$250,000 to US$400,000 per factory. Given the lack of long-term funding available in Bangladesh, ADB’s loan will enable BRAC Bank to offer longer tenure finance to the companies, which are keen on upgrading and improving structural, safety and social standards at their respective units.
