Legal framework critical to boosting green credit
The amendment of the plan on green banking development in Vietnam aims to create conditions for credit institutions to effectively promote green credit, aligning with the global trend of green growth and sustainable development. Despite a 22% annual increase in the banking system s green credit from 2017 to 2023, outstanding green credit still accounts for only 4.5% of total banking credit, falling short of expectations. Key barriers include the lack of a green taxonomy for evaluating credit solutions and a legal framework for implementing green credit and sustainable finance. The State Bank of Vietnam (SBV) has issued Decision 1663/2024 to amend and supplement its previous decision, including updates on green projects and responsibilities for state agencies. This decision aims to provide a consistent legal basis for credit institutions to carry out green banking activities. Credit institutions like MBBank and UOB Vietnam have high proportions of green credit and lower interest rates for this type of credit. However, the lack of a clear legal framework on the national green taxonomy makes it challenging to identify suitable projects for green financing. Dr Can Van Luc, Chief Economist of the Bank for Investment and Development of Vietnam (BIDV), highlights the need for Vietnam to mobilize about 368 - 380 billion USD for green development from now to 2040. The perfection of the legal framework will open up opportunities for credit institutions to tap into this potential. In summary, the recent amendment of the plan on green banking development in Vietnam aims to address barriers and create a consistent legal basis for credit institutions to promote green credit and support sustainable development. However, challenges remain in identifying suitable projects and establishing a clear legal framework for green credit and sustainable finance.
Source: en.vietnamplus.vnPublished on 2024-09-15
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