To complete the legal framework on green credit in line with green growth goals in Vietnam

To complete the legal framework on green credit in line with green growth goals in Vietnam (Internet image)

To complete the legal framework on green credit in line with green growth goals in Vietnam

Content mentioned in Decision 1408/QD-NHNN in 2023 on the Action Plan of the Banking Sector to Implement the National Strategy on Green Growth for the 2021–2030 Period and Project on Tasks and Solutions to Implement the Results of the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change issued by the Governor of the State Bank of Vietnam.

Among the tasks in this decision, the completion of the legal framework on green credit in line with green growth goals is as follows:

- Reviewing, amending, and completing the provisions of the law on the credit granting activities of credit institutions to customers in order to create unity, synchronization, and in line with the trend of green growth and sustainable development; creating conditions for improving the operational capacity of credit institutions; diversifying forms of credit granting in order to increase the accessibility to bank credit capital of people and enterprises serving production and business; including projects and plans for production and business with environmental benefits and environmental protection.

(Units under the State Bank of Vietnam shall base themselves on their assigned functions and tasks to perform.)

- Continuing to research and perfect regulations on environmental risk management in credit granting activities in accordance with the provisions of law and the actual operation of credit institutions (the Department of Credit for Economic Sectors does it).

- Reviewing and perfecting foreign exchange management policies, contributing to the mobilization of financial resources from abroad for green growth, in line with the development level and openness of the Vietnamese economy and complying with the provisions of the law (the Department of Foreign Exchange Management shall coordinate with the Department of International Cooperation, the Department of Monetary Policy, and related units to implement them).

- Reviewing, amending, and supplementing strategies and action plans of the banking industry to ensure integration and conformity with the objectives of the National Strategy on green growth for the period 2021-2030, with a vision to 2050, Strategy on climate change adaptation and greenhouse gas emission reduction to 2050 and Project on tasks and solutions to implement the results of the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (The Institute of Banking Strategy is the focal point to coordinate with relevant units to implement).

Besides continuing to implement the Green banking development project in Vietnam in the period of 2021–2025, research and propose orientations for the development of a green banking model in Vietnam in line with the National Strategy on Green Growth in the 2021–2030 period, with a vision to 2050 (The Institute of Banking Strategy is the focal point to coordinate with relevant units to implement).

**Executing monetary and banking policies, contributing to the implementation of the national green growth target.

- Keep abreast of market developments, domestic and foreign economic situations, and coordinate harmoniously with fiscal and other macroeconomic policies to flexibly and synchronously operate monetary policy tools and solutions to control inflation, contribute to maintaining macroeconomic stability, and stabilizing the monetary market and foreign exchange, support green growth, respond to climate change and sustainable development (Monetary Policy Department is the focal point in coordination with relevant units to implement).

- Guiding credit institutions to grant credit to the Green Classification List after the competent authority approves the Green Classification List; guiding the statistics of green credit outstanding balance in the banking system (the Credit Department of key economic sectors in coordination with the Department of Forecast and Statistics and relevant units to implement).

- Studying international experiences to propose the implementation of climate risk management in banking activities
(The Department of Credit for Economic Sectors, the Department of Monetary Policy, and the Banking Inspection and Supervision Agency shall, based on their functions and tasks, coordinate with relevant units to implement.)

- Managing credit growth reasonably, meeting the credit capital needs for the economy, and contributing to the realization of the national green growth target; Directing credit institutions:

(i) Promoting the mobilization of resources, including the issuance of green bonds to finance projects on the Green Classification List, with the aim of protecting the environment and responding to climate change;

(ii) Focusing and prioritizing the allocation of reasonable capital to finance projects on the Green Classification List on the basis of assessing the efficiency of capital use and financial capacity of customers;

(iii) Gradually increasing the proportion of investment bank credit capital, finance projects on the Green Classification List, focusing on industries/fields such as: renewable energy, transportation, production of building materials, agriculture, waste treatment, manufacturing industries, low carbon consumption, ...in line with Vietnam's committed target of net zero emissions by 2050;

(iv) Implement regulations on environmental risk management in credit extension activities; actively research, update, and develop green credit products; manage environmental and social risks and climate risks in credit granting activities, gradually approaching international standards.

(Monetary Policy Department, Credit Department of Economic Sectors, Credit Institutions, and Related Units Implement)

dd) Prioritize considering and assigning credit growth targets to credit institutions with outstanding credit balances.
for the Green Classification List, in line with the State Bank's credit management guidelines and orientations in each period (the Monetary Policy Department is the focal point for implementation).

e) Research, perfect, and improve the quality of statistics work; digital transformation application to the statistical reporting system; green growth database of the industry (Department of Forecasting and Statistics, Department of Information Technology, in coordination with relevant units to implement)

More details can be found in Decision 1408/QD-NHNN in 2023.

Duong Chau Thanh

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