MAS Outlines Options to Promote Sustainability-Linked Loans to SMEs
When asked in the Parliament about the plans to make green financing more accessible to small and medium-size enterprises (SMEs), Tharman Shanmugaratnam of MAS emphasized that MAS is taking further steps to promote green and sustainability-linked loans to SMEs. Later this year, MAS will launch a Green and Sustainability-Linked Loan Grant Scheme, which will be open to SMEs and other corporates. This grant will defray the cost of obtaining independent external reviews to demonstrate that sustainability targets are material and to verify that the loan proceeds will be channeled to green and sustainable activities.
According to Mr. Shanmugaratnam, another possible solution for promoting green and sustainability-linked loans is to develop lending frameworks that provide simplified processes and set out clear standardized criteria for borrowers. With such lending frameworks, there would be no need to engage external reviewers to develop, verify, and maintain customized green finance frameworks for each borrower. HSBC’s Green Loan Framework for SMEs, which was launched in Singapore in March 2020, is a promising start and MAS will encourage more lenders to develop such frameworks. As green and sustainable finance activities grow in Singapore, the anchoring of relevant capabilities here will help to bring such loans into the mainstream while encouraging more SMEs to adopt green and sustainability financing. Green and sustainable financing flows are growing strongly in Singapore. From 2019 till the first half of this year, approximately SGD 4.8 billion of green and sustainability bonds were issued in Singapore. However, the green share of total loan and bond transactions in Singapore remains modest at less than 5%, reflecting the significant opportunity for growth.
Keywords: Asia Pacific, Singapore, Banking, Securities, Green Finance, Sustainable Finance, ESG, SME, MAS
Previous Article
MAS Announces Extension of Support Measures Amid COVID-19 PandemicRelated Articles
Regulators Fine Goldman Sachs for Risk Management Failures
FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).
Canada Hosts International Conference of Banking Supervisors
BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.
FCA Proposes More Measures to Help Insurance Customers Amid Crisis
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA Issues Opinion to Address Risk Stemming from Legacy Instruments
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020
ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).
HM Treasury Publishes Policy Statement Amending Benchmarks Regulation
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
APRA Initiates Action Against a Bank for Liquidity Compliance Breach
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2
PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).
US Agencies Finalize Rule to Reduce Impact of Large Bank Failures
US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).
US Agencies Finalize Rule on Net Stable Funding Ratio Requirements
US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.
