BSP Working on Green Financing as Compliance to Agri-Agra Law

The Bangko Sentral ng Pilipinas (BSP) is looking at incorporating sustainable projects or “green” financing as part of compliance for banks due to the revised Agri-Agra law.

BSP Governor Felipe M. Medalla has mentioned that adding the funding green finance as Agri-Agra compliance is part of methods to incentive sustainable project financing.

He says that “We hope to get the necessary revisions in the Agri-Agra Law so that sustainable finance can form part of compliance with a mandatory credit to the Agri-Agra sector,”

Republic Act No. 11901 or the “Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022” lapsed into law last July. This new law is consistent with the Agri-Agra law.

Medalla has stated that the plans on effectively and efficiently implementing RA No. 11901 to aid the agricultural sector and help recoup from the effects of the pandemic. This new law would highlight a financing framework for the development of the sectors affected. This would also allow more access for rural communities of agricultural and fisheries households, and also their micro, small, and medium enterprises (MSMEs), and their financial services and programs.

This law would likewise raise awareness on financing towards social, environmental, and governance projects which include green projects that support inclusive and sustainable economic growth.

On the other hand, the law fails to include banks’ alternative compliance with sustainable projects.

According to the BSP, with the new law, banks do not need to allot 10% of their lending portfolio to beneficiaries of agrarian reform and 15% to agricultural projects.

Source: Manila Bulletin