Green Credit is a loan service for consumption, investment, production and business needs without risking to the environment, contributing to the protection of the common ecosystem. In Binh Duong, Green Credit is also the orientation that the State Bank (SBV) has set for commercial banks in recent years. The commercial banking system in the province is concentrate resources to grant credit to environmentally friendly projects to effectively implement this credit policy.
The commercial banking system in the province actively directs credit flows to green projects. In photo: To consult businesses about borrow loans at BIDV Binh Duong.
An inevitable trend
Vo Dinh Phong, Director of SBV Binh Duong, said that growth trend of green credit has been developing for a long time in the world with energy saving, renewable energy and clean technology projects aiming at a dual target of economic growth combined with environmental protection. For people and business organizations, green credit is an important solution, helps to minimize negative impacts from daily life activities and production processes on the environment and society, contributing to the sustainable development of the economy. For commercial banks, the implementation of green credit program helps to reduce bad debts, enhance financial stability and protect brand image in the market.
One of the big problems for Vietnam is that the environment is being strongly affected by climate change, natural disasters, droughts, floods, environmental pollution... Facing that challenge, together with other industries in the country, green credit is the orientation that SBV has set for commercial banks to achieve the goal of sustainable economic growth. The SBV also sets a target that by 2025, all commercial banks must develop internal regulations on environmental and social risk management in loan assessment and granting. In addition, 100% commercial banks must also carry out a social and environmental risk assessment in credit granting activities; apply environmental standards to projects financed by banks; incorporate environmental risk assessment as part of credit risk assessment.
To increase capital inflow into green credit
The economic growth of Binh Duong contributes significantly to the general improvement of social life, but it also has less positive impacts on the environment. Therefore, the role of credit institutions, especially commercial banking system, is appreciated in the trend of green credit. Binh Duong has some commercial banks that are paying attention to green credit development such as Vietcombank, Agribank, TPbank...
Vietcombank system in the province is providing green loans with outstanding loans of nearly VND 840 billion and 39 projects. Assessing environmental and social risks in credit granting is a mandatory goal regulated by Vietcombank, thereby helping to reduce many risks for both customers and the bank. Similarly, Agribank system in Binh Duong also has 3 green projects with outstanding loans of nearly VND175 billion. Agribank has an internal document specifying TDX lending in order to assess environmental and social risks in credit granting for green credit projects before approving credit to customers. Environmental standards for projects are specifically analyzed and evaluated to ensure compliance with regulations and guidelines. In addition, periodically, Agribank also inspects the use of loans in combination with environmental risk assessment to have timely supervision.
To have this result, according to Mr. Vo, SBV has encouraged credit institutions to direct capital flows to environmentally friendly projects including green agriculture, water management, sustainable forestry, clean energy and renewable energy. With active activities, green credit of commercial banks in the province is changing markedly. “With a network of 79 commercial banks, 181 transaction offices, it can be said that the banking system plays a decisive role in promoting investments towards sustainable environmental development and community responsibility. When bank capital is flowing more and more strongly into green projects, green credit will occupy an important position in the credit structure of credit institutions", said Mr. Vo.
Over the first quarter of 2021, credit balance for green projects was VND 1,443 billion, down 5.78% compared to 2020 (affected by COVID-19), up 69.55% compared to 2019. In which, the balance of medium and long-term loans accounted for 62%. Currently, green credit's outstanding loans are focused on sustainable water management in urban and rural areas, accounting for 60% of total outstanding loans. The number of green credit's projects granted in 2016 was 10 projects, in 2020 was 102 projects.
Reported by Thanh Hong - Translated by Ngoc Huynh
