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Monetary execs mull green financing policy for banks

By Joann Villanueva

November 25, 2019, 5:36 pm

<p><span style="font-weight: 400;">BSP Deputy Governor Chuchi Fonacier </span><em><span style="font-weight: 400;">(PNA File Photo)</span></em></p>

BSP Deputy Governor Chuchi Fonacier (PNA File Photo)

MANILA -- Any decision on the green financing policy of banks need to be studied well to make sure that financial institutions are able to comply and prevent a situation similar to the result of the Agri-Agra Law.
 
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier said they do not want a mandated level of sustainable financing for banks since the Agri-Agra Law showed that allocating a certain level for loans for a certain sector is not effective.
 
Green financing or sustainable financing pertains to loans being extended for projects that promote the care of the environment, such as solar and wind energy plants and those that help address climate change.
 
Fonacier said monetary officials appreciate lawmakers’ initial decision not to allocate a certain level for banks’ sustainable level loans.
 
“That’s why we will start with high level principles from the Board. So the Board of the bank would be the one to determine how many percent of the portfolio, even the industry, they would like to provide the credit,” she said.
 
Under the Agri-Agra Law, banks are required to allocate 25 percent of their loanable funds to farmers and fisherfolk. Specifically, 15 percent should be extended for the farm sector and 10 percent to the agrarian-reform beneficiaries (ARBs).
 
Earlier, Bank of the Philippine Island (BPI) President and Chief Executive Officer (CEO) Cezar Consing said they plan to increase the share of green financing to the total portfolio to 50 percent of the total in the near term.
 
He said while sustainable financing is only on its infant stage in the Philippines, he is optimistic that more investors would turn to this kind of projects in a few years.
 
While this is good news, Fonacier said it not advisable to impose a certain level of financing for this sector for the banks, citing that most banks are not even compliant to the Agri-Agra Law.
 
Fonacier said an inter-agency working group is now looking into this issue to make sure that banks would be able to comply with the sustainable financing program.
 
She said one major issue is the availability of projects that would be financed by the banks.
 
“There’s no sense in mandating them to lend to this sector if the industry itself, like the energy sector, is not ready for it,” she said.
 
Fonacier further said the share of green financing portfolio of banks are still “very small” compared to the total loans, although some banks have extended large amount due to project size. (PNA)                              
 

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