The central bank on Friday said that banks should stop lending
to projects that cause heavy pollution and waste energy.
It also urged commercial banks to establish a long-term
mechanism that uses lending to support technological innovation in
energy saving and emission reduction, according to a People's Bank
of China guideline published on its website.
Meanwhile, it said banks should offer more help to companies in
the energy-saving and environmental protection sectors.
According to the guideline, banks should call in existing loans
for projects in the "forbidden" category of industries designated
by the state and extend no new credit to those in the "limited"
category.
For existing projects in this category, banks can continue to
lend if it is "necessary" and if the state allows those projects to
undergo technological upgrading to meet environmental
standards.
To encourage enterprises to cut pollution and meet environmental
standards, the state has divided industries into different
categories and has different industrial policies toward them.
To implement the financial policy, the central bank urged its
local branches to strengthen "window guidance," or moral suasion,
and remind banks of lending risks to different industries.
The central bank also urged its local branches to help improve
the national corporate credit system and include thorough
information on enterprises' environmental records in the
system.
The new guideline is a move to "properly control lending,
optimize the structure of loans and strengthen lending risk
management", the central bank said.
"Banks can be an important lever in enforcing environmental
standards," said Bert Hofman, World Bank Lead Economist for China.
"And China has some way to go in this respect," he told China
Daily.
The central bank said it will work with the State Environmental
Protection Administration to launch further environmentally
friendly policies, but did not elaborate.
(China Daily July 7, 2007)
