General & Misc

Banks may assess Pollution Risks before granting Loans

Date: 09 June 2019; Type: Legal News; Source: Vietnam News Agency

Hanoi, Jun 9 (VNS/VNA) - Banks will assess environmental pollution risks when granting loans to projects in some industries, according to a State Bank of Vietnam (SBV) draft regulation.

Under the regulation, which was drafted by the SBV and the International Finance Company (IFC), the industries include thermal power, paper and pulp, fabric dyeing, seafood processing and battery makers.

These industries have high levels of pollution and can easily cause negative impacts on people and the surrounding environment.

The regulation aims to implement a SBV scheme that targets enhancing the awareness and corporate responsibility of commercial banks about environmental protection and climate change response so as to direct their credit into eco-friendly projects and programmes.

Under the scheme, banks will have to gradually increase the ratio of loans to prioritised green industries and sectors.

They must also develop internal regulations on environmental and social risk management in their lending activities.

Climate change and environmental pollution are global problems. Therefore, investment, trading and consumption of green products is encouraged by the Government.

Considered a field with much potential, green credit is being promoted by banks, especially with real estate credit being tightened. Some banks have implemented credit programmes with priority given to high-tech agriculture, solar energy and environmentally friendly projects.

At HDBank, for example, besides financing 7 trillion VND (300.4 million USD) to solar projects, the bank has also launched a 10 trillion VND (428.67 million USD) credit package for businesses operating in high-tech agriculture and clean agriculture across the country, with preferential interest rates of 1 percentage point lower than that of normal loans.

Nam A Bank, in conjunction with the Global Climate Partnership Funds (GCPF), has implemented its Green Credit Programme to finance production and business projects which feature environmental protection and socially friendly consumption, with preferential interest rates of about 5-6 percent per year.

According to Tran Ngoc Tam, General Director of Nam A Bank, this was the first step for the bank in the community project titled ‘I choose to live green’.

According to experts, amid a changing world economy, green credit is an inevitable evolution of the global financial industry. This is also an important field to promote sustainable development and realise Vietnam’s green growth strategy.

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