dr. muhammad saleem, state bank of pakistan
Post on 25-Jan-2022
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Conventional Role of Central Banks
Regulation of Liquidity
Ensuring the Soundness of Financial System
Exchange Rate Management And Balance of Payments
Managing Payment Systems
Specialized Role:
Priority sector financing
NEED TO CHANGE FOCUS Two major issues to be focused by Central banks;
Financial Inclusion
Climate Financing
%age adult population with an Account -2016
95
70
15
47
35
17
62
0
10
20
30
40
50
60
70
80
90
100
Highincome:OECD
East Asia &Pacific
Middle East South Asia Sub-SaharanAfrica
Pakistan World
Source: Indian data http://www.financialexpress.com/article/industry/banking-
finance/credit-deposit-ratio-near-4-year-low/146888/Other Countries: http://www.statista.com/statistics/276285/loan-to-deposit-ratio-in-the-global-
bank-industry/
ADVANCES TO DEPOSITS RATIO
95
6172
96
116
75
47
0
20
40
60
80
100
120
140
BanksWorldWide
China UnitedStates
Japan Europe India Pakistan
Green/ Sustainable Banking
Green Banking promotes environmental friendly
practices in banks in their operations & activities
These activities in banks could include:
lending to environment friendly projects,
promoting resource conservation/efficiency,
promoting paper-less environment
operating green branches etc
Role of Central Bank in Promoting Climate Investment
• Green Banking Guidelines
• Prudential regulation for project financing
Enabling Regulatory Framework
• Credit Guarantee Facility (Risk sharing )
Market Development
• Refinance/Credit Line for climate financing
Public Financing Mechanism
• Capacity building Workshops/Seminars/Conferences
Awareness & Capacity Building
How is banking sector relevant to Climate Change?
Direct
Indirect
• Through on-lending to business/ industries which include sectors like steel, paper, cement, chemicals, fertilizers, power, textiles etc
Banking sector interacts with the environment in
two ways:
Day to day operations such as use of paper, electricity, stationary, lighting, air conditioning, electronic equipment etc
Green Banking for Development
The motives for adoption of GB exists both for banks as
well as regulator(s) i.e. Central Banks
For Banks, going green means:
Economic benefits,
Avoidance of undesired negative publicity from societal groups
Compliance with the regulations
Corporate Social Responsibility
Guidelines will be applicable to all banks and DFIs
Guidelines intend to set minimum standards for a fair and competitive environment.
Enabling Regulatory Framework - Green Banking Guidelines
Scope of Applicability
Reduce vulnerability of financial system from risks arising from theenvironment
Facilitate banks/ DFIs to fulfill their responsibilities for protection ofenvironment
Encourage financing for transformation of economy into a resourceefficient and climate resilient one
Objectives of Green Banking Guidelines
Green Banking Guidelines
Responsibilities, Management and Organization
Environmental Risk Management Guidelines
Guidelines on Green Business Facilitation
Guidelines on Own Impact Reduction
Key Components of Green Banking Guidelines
Board of Directors has overall responsibility including approvalof green banking policies, strategies and budgets.
The roles and responsibilities of management at all tiers to bealigned with green banking policies
Responsibilities for Green Banking
Environmental Risk Management:
EnvRM to be integrated with existing credit risk managementpolicies and procedures
EnvRM is applicable for all banking activities and clients
EnvRM is for all new exposures & extensions of existingexposures
EnvRM be designed to ensure compliance with applicableenvironmental laws
EnvRM should be forward looking
Banks/ DFIs to develop internal EnvRM systems, proceduresand manuals
Green Banking Guidelines
Green Business Facilitation:
Green product development
Green Financing Portfolio
Earmarking of Funds for Green financing portfolio /investments
Green advisory service
Green Marketing
Multilateral Resources for Environmental activities
Green Climate Fund
Green Banking Guidelines
Own Impact Reduction:
Impact Reduction Targets
Resource Efficiency MeasuresWaste Reduction Measures
Green Branches/Offices
Renewable Energy based ATMs /
branches / offices
Paperless Banking Operations
Green IT Infrastructure
Green Banking Guidelines
SBP Green Banking Initiatives Regulation of branchless banking
SBP’s Refinance Scheme for Renewable Energy
Scheme for energy efficiency financing
Refinance and risk sharing facilities for SME and
Agriculture sector
Financing for warehouse and solar tube wells for agriculture
sector
Partnerships with bilateral & multilateral
organizations
Member of the Sustainable Banking Network (SBN)
Facilitation in Accreditation to Green Climate Fund
Awareness and capacity building on Green Banking
and RE Scheme
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