The State Bank of Vietnam (SBV) issued a rule that would push up greencredit and environmental risk management in the credit-granting processso it could implement the National Action Plan on Green Growth.

Expertsand commercial banks said SBV's decision helped create a level playingfield for green credit growth. Green banking is controlled by the sameauthorities as regular banking, but takes more care to assure itsactions benefit the country's environment, society and naturalresources.

In a recent seminar on green credit andbanking, Nguyen Thi Kim Thanh, head of the SBV's Banking StrategyInstitute, said the banking sector had contributed to the country'ssocio-economic development by playing the role of financial broker andpromoting growth.

Therefore, green credit policiescould lead the economy to green growth, Thanh said. Green credit wouldalso improve people's living standards and protect the environment, sheadded.

"Green banking and credit are used in manycountries at the moment," Thanh told the Thoi Bao Kinh Te (EconomicTimes) newspaper. "However, it is still new in Vietnam. So its effectsare still modest, and it hasn't yet expanded throughout the sector."

Nguyen Tri Hieu, a banking expert, said green credit could help banksfulfill their obligations to society, in addition to boosting profit.

So far, though, Vietnamese banks haven't shown muchinterest in the trend. Hieu said most of them have been preoccupiedstruggling with debt. Many don't see how the issue of the environment isrelated to their businesses.

An expert from theInternational Financial Corporation (IFC) suggested Vietnamesecommercial banks consider environment and society an indispensable partof their risk management structures. Besides, banks should develop greencredit to give their businesses an edge and a new growth tool.

The experts also advised that commercial banks reform their investmentportfolios by systematically assessing investment risks and creditevaluation processes. This would help financial institutions and banksreduce bad loans and increase their financial stability, they said.

According to an official from the Ministry of Planning and Investment,Vietnam needs about 30 billion USD to implement its 2020 green growthplan, 30 percent of which from the State budget. The rest would bemobilised from the private economic sector.

At present, climate change and green growth account for more than 10 percent of the Government's budget.

Banks play a very important role in reaching green growth targets, theofficial said, as private enterprises must mobilise capital from bankswhen investing in green growth projects.

Toeffectively assist green growth, banks should offer enterprises specialcredits, because green growth projects take more time to bring in profitthan others do.

Hieu suggested banks offer incentives such as relocating loans with lower interest or tax priority.

Meanwhile, Nguyen Duc Viet, Deputy Director of the Risk ManagementSection of ABBank, said his bank was interested in comprehensive,sustainable development.

So far, the bank hadcompleted a system of social and environment risk management, which isintegrated into the bank's current risk management, Duc said.

To create a level playing field for all banks, Duc asked managementagencies to issue more policies supporting sustainable growth.-VNA