Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, is relaxing some of its lending rules to encourage banks to finance sustainable projects as part of broader measures to address climate change.
“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,” said central bank governor Eli Remolona in December.
The central bank is gradually reducing its reserve requirement rate for green, social, sustainability or sustainable bonds issued by banks from 3% to 0%. The banks must comply with disclosure requirements and not engage in greenwashing, the central bank said.
The reduction in the reserve requirement is not a change in monetary policy “but is envisioned solely to be a tool to promote sustainable finance”.
In addition, the central bank approved a 15% single borrower limit on loans for eligible green or sustainable projects.
The measures are meant to provide an incentive for banks to extend loans for green projects, including decarbonisation efforts, and are available for two years, the central bank said. According to a survey conducted by the BSP, 75% of banks that responded have financed or approved loans that support green projects.
This page was last updated January 9, 2024
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