Hanoi (VNS/VNA) - Green credit is a trend in the global banking and financeindustry and more Vietnamese banks are following suit.

The StateBank of Vietnam (SBV)’s latest survey of credit institutions (CIs) in the fieldof green growth and green credit released recently showed that theawareness of CIs on green credit has improved significantly.

Specifically,19 CIs have developed strategies for environmental and social risk managementwhile 13 CIs have integrated the content of environmental and social riskmanagement in the process of green credit assessment.

Ten CIshave built credit products and banking services for green sectors and haveshown an interest in providing credit for these sectors, mainly in the mediumand long term with preferential interest rates for green projects.

However,the SBV’s statistics also showed that funding for green projects remained restricted,with only 24 percent of green projects developed by the banks for creditappraisal process.

Accordingto industry insiders, bank loans to green projects are expected to be promotedin the future with the participation of international capital sources.

TPBankhas recently signed a long-term contract for green credit loans worth 20million USD within three years from the Global Climate Partnership Fund (GCPF).The signing of the deal with GCPF will open more opportunities to accesscapital with attractive interest rates for projects, production and businessplans with energy saving factors, carbon dioxide reduction andenvironmental protection.

Bui QuangDuy, GCPF’s Asia-Pacific investment expert, said TPBank was its second bankpartner in Vietnam. The fund highly appreciated the potential of the Vietnamesemarket, expressed by the fact that TPBank immediately signed a number of loansthat exceeded the expected plan.

“Vietnamhas many favourable factors in terms of macro economy, awareness of people andpartners. GCPF determined that this was a big market for long-term developmentwith increasing values,” Duy told Dau tu chung khoan (SecuritiesInvestment) newspaper.

GCPF alsosigned a co-operation on implementing the ‘Green Credit’ programme with Nam ABank to finance businesses and individuals. This is considered the first stepof the bank in the community project ‘I choose to live green’.

Largecapital from the deals between partners or banks and firms with green projectsare increasing. For example, Agribank and Vietnam Development Bank (VDB) signeda co-financing agreement for the Solar Power Plant TTC Phong Dien in thecentral province of Thua Thien-Hue with the investor’s counterpart capital of40 percent and loans from banks of 60 percent.

Agribankand Central Power Corporation (EVNCPC) signed a credit contract to invest inthe construction of the Central Power Solar Project in the south-centralprovince of Khanh Hoa. Total construction investment capital is 1.37 trillionVND, of which 735 billion VND were loans from Agribank.

Accordingto Nguyen Hung, TPBank’s general director, lending to green projects was notonly less risky than conventional credit loans, but also brought more benefitsfor the objectives of sustainable, long-term development and environmentalprotection. Of course, when lending, banks still had to choose loans andcustomers to ensure compliance with conditions and standards to meet greencredit.

Not onlytaking into account efficiency of each borrower, banks now also comply withenvironmental and social factors aimed at gaining sustainable development andmeeting the common interests of the community, Hung said.

Accordingto Ha Thu Giang, Deputy Director of the SBV’s Credit Department, the SBVtargets to have all banks build internal regulations on environmental andsocial risk management in credit granting activities by 2025.

Besidesapplying environmental standards for projects funded by banks, by 2025, allbanks will also have to assess social and environmental risks in their creditgranting activities, and combine environmental risk assessment as part of theircredit risk assessment.

By 2025,the SBV also plans to have at least 10-12 banks establish specialised units ordepartments for environmental and social risk management while 60 percent ofbanks have access to green capital and provide loans for green credit projects.

The SBVencourages credit institutions to develop green banking strategiesindependently or integrated into annual business development strategies andplans. It also gives support to banks to develop specific policies forsensitive environmental areas, Giang said.-VNS