MAS published response to a question asked in the Parliament on measures to target small and medium-size enterprise (SME) awareness and accessibility under the Green and Sustainability-Linked Loan Grant Scheme (GSLS). The response states that the GSLS has a track that encourages banks to develop green and sustainability-linked loan frameworks, which will have to include eligibility criteria that are verified against internationally recognized green and sustainability-linked loan principles. This removes the need for SMEs to develop their own customized frameworks before obtaining a green or sustainability-linked loan, and reduces the friction SMEs face in accessing such loans. HSBC and OCBC have launched such green and sustainability-linked loan frameworks for SMEs.
GSLS aims to support companies of all sizes, including SMEs. MAS will defray up to SGD 100,000 of the expenses incurred by borrowers in engaging independent service providers to verify the green and sustainability credentials of such loans. While the GSLS supports the adoption of such loans, MAS recognizes that the cost, time, and effort of procuring the necessary sustainability advisory and assessment services may not be commensurate with the loan quantum, particularly for smaller SMEs. The GSLS, therefore, has the track that encourages banks to develop green and sustainability-linked loan frameworks. Under this track, MAS provides greater funding support to banks when they develop loan frameworks that are targeted at SMEs. Expenses incurred by banks to develop, verify, and report on the green and sustainability credentials of loan frameworks targeted at SMEs will be defrayed by 90%, compared with 60% of expenses for other green and sustainability-linked loan frameworks. MAS expects to support more banks in developing such frameworks under the GSLS. To promote awareness and encourage take-up of the GSLS, MAS is partnering with Enterprise Singapore (ESG) and banks to reach out to SMEs.
Keywords: Asia Pacific, Singapore, Banking, GSLS, Sustainable Finance, ESG, SME, Credit Risk, MAS
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