The central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP), has approved temporary measures to encourage banks to extend loans or finance investments for green or sustainable projects, as reported by Bloomberg on December 16. The BSP will provide banks with an additional 15% single-borrower limit on loans, credit accommodation, and guarantees to finance eligible green or sustainable projects. In addition, the central bank will reduce the reserve requirement rate to zero for existing and new issuances of green, social, sustainability, and other sustainable bonds. Both the two measures will be available for banks for two years with the potential for reassessment.

The new incentive measures are part of the BSP’s 11-point Sustainable Central Banking (SCB) strategy. Introduced in December 2022, the SCB strategy aims to mainstream green and sustainability principles and practices in BSP operations and across the financial system. BSP Governor Eli Remolona stated that the bank will identify and create appropriate incentives within its mandates, empowering the banking system to steer capital flows toward green or sustainable investments. According to a survey launched by the BSP, 75% of respondent universal and commercial banks in the Philippines have financed or approved loans supporting green or sustainable projects totaling PHP830bn (USD14bn) as of June 2022, representing roughly 7% of the country’s banking system’s total loan portfolio.

Sources:

https://www.bloomberg.com/news/articles/2023-12-16/philippine-central-bank-issues-rules-to-spur-green-lending?srnd=green

https://www.sunstar.com.ph/cebu/bsp-eases-rules-to-drive-lending-for-green-projects

https://mb.com.ph/2022/12/22/bsp-launches-own-11-point-strategy-for-sustainability/

https://www.aseanbriefing.com/news/philippines-central-bank-to-introduce-incentives-for-green-financing/