MANILA – 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 level of loans for a certain sector is not effective.
Green financing or sustainable financing pertains to loans extended for projects that promote environmental care, 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 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.
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 added that 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)
