BRAC Bank to Sell Bangladesh's First Green Bond, a Tk1,000 Crore Zero-Coupon Issue

BRAC Bank is preparing to sell Bangladesh's first certified green bond, a Tk1,000 crore zero-coupon issue that the bank says will fund solar power, energy-efficient factories and other environmentally friendly projects. The bank's managing director and chief executive, Tareq Refat Ullah Khan, unveiled the final terms at a press conference in Dhaka on October 25, five months after the board first approved raising the money.

• The bond is worth up to Tk1,000 crore, three-year tenure, senior, unsecured, non-convertible and fully redeemable.
• It is zero-coupon, meaning investors buy at a discount and collect the full face value at maturity, with a targeted return of 7.5 percent.
• It follows ICMA's Green Bond Principles and carries a second-party opinion from S&P Global Ratings, a first for a Bangladeshi bank bond.
• Proceeds are earmarked for renewable energy, green buildings and industrial energy-efficiency projects.

From board approval to the sales desk

BRAC Bank's board approved the green bond in principle on May 21, aiming to raise up to Tk1,000 crore through a private placement for its green financing book. Five months on, the bank has turned that approval into a fully structured instrument, with a fixed tenure, a target yield and a certification process that the earlier announcement did not include. The bond will be sold privately to corporate institutions and individuals, and eligible company provident and gratuity funds may also participate, subject to their own investment rules.

How a zero-coupon bond actually pays out

Unlike a conventional bond that pays periodic interest, each of BRAC Bank's bonds carries a face value of Tk10 lakh and is sold at a discount. At the targeted 7.5 percent return, a Tk10 lakh bond would be priced at roughly Tk8.05 lakh when issued, with the gap between the purchase price and the face value standing in for three years of interest. Investors get one lump sum at maturity rather than a stream of coupon payments, which can suit buyers who want a known fixed return without reinvesting interest income along the way.

Why BRAC Bank is betting on green debt

BRAC Bank already has more than 60 percent of its loan book in sustainable finance, and it has ranked among Bangladesh Bank's top sustainable banks for five consecutive years running. It topped Bloomberg's ESG rating among Bangladeshi banks and sold the country's first social bond in October 2025 to strengthen its Tier II capital. The bank is coming off a record year financially, with 2025 consolidated profit reaching Tk2,250.94 crore, up 57 percent, making it the first local private lender to clear the Tk2,000 crore mark. First-quarter 2026 profit continued that run, up 44 percent year on year to Tk695.68 crore.

"This green bond marks an important milestone in BRAC Bank's sustainable finance journey," said Tareq Refat Ullah Khan, Managing Director and CEO of BRAC Bank.

Khan also pointed to rising fuel costs as a reason factories need long-term, affordable financing for renewable power rather than relying on short-term loans that get more expensive as energy prices climb. The bank plans annual audits to confirm the bond's proceeds actually go to the green projects it names, a step meant to reassure investors who are increasingly wary of "greenwashed" bonds that raise money under an environmental label without delivering matching environmental outcomes.

What it means for you

For everyday savers, a bank-issued bond at a 7.5 percent targeted return sits in between a fixed deposit and the stock market on the risk ladder, carrying bank credit risk rather than a government guarantee, and locking up money for three years with no interim coupon. Corporate treasurers and provident fund managers get a new fixed-income option with an environmental label that increasingly matters for their own reporting. Anyone weighing this against a standard FDR before committing three years of savings can compare current deposit rates using the site's FDR and DPS calculator, and business owners curious whether their own energy-efficiency upgrade could qualify for similar green financing should ask their relationship bank directly, since eligibility criteria are set project by project.