IFSCA has been established as a unified regulator to develop and regulate financial products, financial services and financial institutions in the International Financial Services Centres in India
The International Financial Services Centres Authority (IFSCA) on Wednesday invited public comments on the draft framework on sustainable and sustainability-linked lending by financial institutions in IFSCs.
“The draft guidance framework intends to encourage the IFSC banking units (IBU) and finance companies/ finance units (FC/FUs) (undertaking lending activities from IFSCs) to internally develop a comprehensive board approved policy on green/ social/ sustainable/ sustainability linked lending,” IFSCA said in a statement.
The guidance intends to provide a broad framework for the adoption of principles aligned with the existing international standards viz. green/ social loan principles developed by loan market association (LMA), bond principles developed by the International Capital Markets Association (ICMA), Climate Bond Standards by Climate Bonds Initiative and any other similar recognised standards, it said.
IFSCA has been established as a unified regulator to develop and regulate financial products, financial services and financial institutions in the International Financial Services Centres (IFSCs) in India.
As the climate crisis deepens, economies across the globe are transitioning towards sustainable and low-carbon growth, it said, adding that this transition is fuelled by their commitment to meet the Paris Agreement and the Sustainable Development Goals (SDGs).
Banks and financial institutions are one of the key players who can support this transition by directing financial flows to sustainable and climate-friendly solutions via lending or by raising capital for sustainable and sustainability-linked projects, it said.
However, it said there is a need for banks and financial institutions to have a policy to ensure transparency in this process to avoid concerns like greenwashing.
IFSCA proposes to direct the IBUs and FC/ FUs (undertaking lending activities from IFSCs) registered with it to develop a board-approved policy on sustainable lending within nine months from the date of issuance of the final framework, it said.
Further, it said such entities will have at least 10 per cent of their loan assets in the form of lending to green/ social/ sustainable/ sustainability-linked sectors/ facilities from the financial year beginning April 2023/ calendar year beginning January 2023.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.