SBV to divert more credits to eco-friendly projects

The State Bank of Vietnam (SBV) has issued Decision No.1604/QD-NHNN, approving a scheme on developing green banks in the country by using credit to back eco-friendly projects, with the aim of raising awareness of local banks on the social responsibility in fighting climate change, reported the local media.

Illustrative image. (Source: VNA)

Vietnamese dong banknotes are seen on a cash counter at a commercial bank. SBV to pert credit fund to eco-friendly projects.

SBV will issue a list of green projects that use clean and renewable energy. The sectors that own these projects will be prioritized to receive credit funds if they need support. The scheme also emphasizes creating eco-friendly habits in banking activities and applying advanced technology to enhance ecommerce payment methods and services and reduce cash-based transactions.

A key target of the scheme is that all banks across the country should design by 2025 internal regulations on environmental and social risk management when lending credit. In addition, all financial institutions should be able to evaluate the social and environmental risks and should apply environmental standards to green projects that obtain loans from banks.

The scheme stipulates that at least 10 or 12 banks should have their own departments in charge of social and environmental risk management, adding that 60 per cent of banks can access green funding to grant loans for green projects.

The scheme highlights solutions for the planning and issuance of preferential policies and tools to encourage credit agencies to develop green banks, while ensuring these policies do not affect monetary regulations and inflation target control. Commercial banks that lend a high proportion of green credit will be given priority when seeking preferential loans from international organizations or from SBV’s partners.

Credit organizations are required to map out appropriate strategies on green banks, based on their business orientations, market segments, target products and clients, along with their qualifications. Besides this, they need to build specific lending policies for sectors such as agriculture, leather, renewable energy and textile-garments, as well as keep a close eye on projects that are harmful for the environment, while taking steps to minimize lending to them.

The scheme will be executed in two phases: the first phase will run until 2020, and the second phase will last from 2021 to 2025. Banking Strategy Vietnam, the Credit Department and the Monetary Policy Department are required to partner with the relevant agencies to execute the scheme./.

VNF/Saigon Times