context: This plan is the central bank’s latest efforts to incentivise financial institutions to scale up green projects. Yi Gang 易纲 PBoC governor also said that the bank will support carbon reduction and green finance through adjusting commercial bank ratings and deposit insurance rates, as well as through macroprudential assessment.
On 9 Jun 2021, PBoC (People’s Bank of China) announced its green finance assessment plan for banks, effective 1 June. It stipulates
- green finance businesses used in the plan include, but are not limited to, loans, securities, equity investment, financial leasing and trusts
- businesses that will be under assessment are domestic green loans and green bonds
- assessment will be carried out based on quantitative (80 percent), like the portion of green businesses, and qualitative indicators
Financial institutions’ self-managed and wealth management funds will very likely shore up investment in green bonds in the future and boost the green bond market, note bank insiders. This will help bring down financing costs.
The plan also adds that assessment results will be incorporated into the central bank’s policy and prudential management tools. The results will directly impact the fees that fund the deposit insurance program and other financial businesses banks would like to open, Caixin explains.