Green companies may get easier access to bank loans
JAKARTA: The central bank and the Environment Ministry agreed to prepare regulatory framework on green banking to give environmentally friendly firms easier access to credits, top officials say.
The agreement was signed in Jakarta by Bank Indonesia Governor Darmin Nasution and Environment Minister Gusti Mohammad Hatta.
The environment minister said the ministry and central bank, under the MoU, agreed to prepare the regulatory framework for green banking through four main programs.
"The programs consist of the establishment of legal tools, information, education and joint research," he said at a press briefing at BI offices in Jakarta. The main program, Gusti said, would be the revision of the central bank regulation (PBI) on green banking and its guidelines.
"There will be technical meetings between BI and the Forestry Ministry, along with several training workshops," he said, adding that the ministry would need the help of banks so companies that borrowed from them could help keep the environment healthy.
BI's Darmin said modern banking systems needed more sophisticated mechanisms in the provision of loans to environmentally friendly firms.
"Environmental issues are becoming more significant, affecting risks for loans disbursed to companies," he said.
"If a company conducts practices that threaten the environment, its credit should also be threatened. So we are preparing regulations that would factor in environmental issues into the health level of the company, its products and its credit."
Clear legal ground is expected as the outcome of the two institutions' cooperation, both officials said, aimed at providing a healthier environment for Indonesians.
Apart from that, tougher ground rules for companies to apply environmentally friendly practices would also eliminate banks' potential bad credit due to the risks of detrimental practices for businesses, Darmin added. BI deputy governor Muliaman Hadad said the BI regulation on green banking was actually drafted in 2005, but needed to be evaluated to determine if it was still relevant to support a sustainable commitment to provide a healthier environment. "We will inform the banking industry about the new regulation once we have sorted things out on paper legally. -PB News