The Bangko Sentral ng Pilipinas (BSP) has announced significant regulatory changes to promote green and sustainable financing.
According to Business World, the Monetary Board’s decision to gradually reduce the reserve requirement rate for sustainable bonds issued by banks to zero represents a substantial shift in policy.
Initially, a 200-basis-point reduction will be applied in the policy’s first year, followed by a further 100-basis-point reduction in the subsequent year. These sustainable bonds must adhere to either the Securities and Exchange Commission (SEC) standards or other international standards, as well as the disclosure requirements under the Sustainable Finance Framework.
In a parallel move, the Monetary Board has increased the single borrower limit by an additional 15% for loans earmarked for eligible green or sustainable projects. These projects must align with various principles and guidelines, including the 2022 Strategic Investment Priority Plan, the Republic of the Philippines Sustainable Finance Framework, and others.
These measures, valid for two years from their effective date, are part of BSP’s broader agenda to foster a sustainable economy. BSP Governor Eli M. Remolona, Jr. emphasized the central bank’s commitment to this cause, noting their role in directing capital towards green investments and addressing transition and adaptation challenges.
Furthermore, the BSP’s recent survey highlighted the substantial financial support already extended by banks for sustainable projects, with P830 million and $14 million financed or approved by universal and commercial banks as of end-June 2022.
BSP Governor Eli M. Remolona, Jr. said, “As a sustainable finance champion, the BSP will continue to play an active, enabling role in fostering the transition towards a sustainable economy. We will identify and create appropriate incentives that are within our mandates empowering the banking system to steer capital flows toward growing green or sustainable investments and accelerate the development of solutions addressing just transition and adaptation-related challenges.”
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