Banks in Vietnam eye regulatory support to boost green finance-Xinhua

Banks in Vietnam eye regulatory support to boost green finance

Source: Xinhua| 2023-03-28 17:56:30|Editor: huaxia

HANOI, March 28 (Xinhua) -- Having a regulation framework in place will help Vietnamese banks align their businesses with the country's low-carbon economic growth pathway, the Vietnam News reported on Tuesday.

Financial institutions in Vietnam are managing to boost financing to fund green projects, however, green loan market in the country remains relatively small due to the lack of regulatory support, according to industry experts.

Green or sustainability-linked loans, mostly channeled to green agriculture and renewable energy investments, in Vietnam's banking sector accounted for only 4.2 percent of total loans at the end of 2022, up 12.9 percent from a year earlier, to around 500 trillion Vietnamese dong (21.2 billion U.S. dollars), the central bank's data showed.

State-owned Agribank, among Vietnam's big-four lenders by assets, has prepared financial capabilities for targeted lending for green projects, however, the lender finds it difficult to determine financing needs and offer green loans without specific environmental criteria or certifications, Deputy General Director Nguyen Thi Phuong said.

Green lending has yet to grow significantly in Vietnam mainly because of the lack of guidance when it comes to assessing loan applications and determining climate-related financial risks, said Nguyen Mau Son, a branch executive of BIDV, one of the country's largest listed banks.

The State Bank of Vietnam said it will soon issue guidelines for financial institutions to boost green finance, standing Deputy Governor Dao Minh Tu told the state television VTV.

Besides developing a standard industry framework for green loans, the central bank plans to offer regulated financial entities incentive policies to encourage them to increase loans available to low-carbon industries and businesses.

As Vietnam targets net-zero carbon emissions by 2050, it is seeking solutions to develop green finance to catalyze investments in sustainable projects such as renewable energy.

According to the latest report by the International Finance Corporation, Vietnam will need 368 billion dollars or 6.8 percent of GDP per year, through 2040 to transition to a green economy and respond to the impacts of climate change.