Global Journal of Economic and Finance Research

Purpose: Bangladesh needs its banks to finance climate adaptation while protecting both vulnerable borrowers and bank balance sheets from physical and transition risks. State-owned commercial banks (SOCBs) have national reach and public mandates, yet they carry some of the weakest asset quality in the system. This paper asks how SOCBs can integrate climate risk management with inclusive lending without excluding the communities most exposed to climate hazards.

Design/methodology/approach: The study uses a structured policy review and institutional design method. It analyzes Bangladesh Bank’s sustainable finance, environmental and social risk, disclosure and climate risk instruments (2020–2025), recent supervisory statistics, the World Bank’s Country Climate and Development Report, international standards (NGFS, BCBS, TCFD, IFRS S2) and peer-reviewed research on climate-related credit risk and state bank governance.

Findings: Taxonomy-based green classification is necessary but insufficient. In April–June 2026, SOCBs channeled about 1.6 percent of their term-loan disbursement to green finance, against roughly 12.1 percent for the system. With non-performing loans near 44 percent of SOCB credit, climate lending without location-aware underwriting, verified adaptation and governance safeguards risks creating new distressed assets.

Originality/value: The paper proposes a Climate-Resilient Inclusive Banking (CRIB) model that assigns decisions, evidence and inclusion safeguards across five levels: board, portfolio, product, branch and customer.

Implications: The model offers SOCB boards and Bangladesh Bank a practical route to implement the 2025 climate risk guideline, separate policy-directed from commercial exposure, and report adaptation outcomes rather than disbursement volumes alone.

climate risk; sustainable finance; state-owned banks; adaptation finance; financial inclusion; bank governance; Bangladesh JEL Classification: G21; G28; G32; H81; Q54; Q56

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