The Bangko Sentral ng Pilipinas is extending key regulatory incentives designed to encourage banks to expand lending for green and climate-resilient projects.
The Monetary Board approved a two-year extension of the incentives introduced in 2023 under BSP Circular No. 1185, keeping them in force until January 6, 2028. The move is intended to sustain banks’ momentum in scaling up sustainable finance as funding needs for climate adaptation continue to rise.
Under the framework, banks are allowed to exceed the 25 percent single borrower’s limit by up to an additional 15 percent for eligible green and sustainable projects. Lenders may also deploy the full proceeds of sustainable bond issuances, with these funds exempted from the usual 3 percent reserve requirement—effectively lowering funding costs and expanding lending capacity.
The BSP said the extension supports the transition toward a climate-resilient economy while strengthening the domestic capital market by encouraging broader participation among issuers and investors.
The incentives are expected to continue channeling credit into priority sectors such as renewable energy, clean transportation, water and wastewater systems, and climate-resilient infrastructure.
These activities align with the National Adaptation Plan, Nationally Determined Contributions, and the Philippine Development Plan.
Beyond the extension, the BSP is reviewing the prudential treatment of climate-focused lending, including the possible recalibration of risk weights to better reflect domestic conditions. It is also exploring blended finance arrangements with government agencies, development partners, and the private sector to help de-risk sustainable projects and widen investor participation.
Before the incentive window closes, the central bank plans a comprehensive review of market conditions, utilization, and potential refinements—signaling that sustainable finance will remain a key pillar of its long-term regulatory agenda.
