Enterprises that have poor environmental records risk being
rejected for bank loans under a nationwide credit system that
factors environmental information into loan applications.
The People's Bank of China (PBOC), the central bank, is working
with the State Environmental Protection Administration (SEPA) to
push the initiative, according to Su Ning, the bank's deputy
governor.
"This (move) will encourage enterprises to think more about the
effect their operations have on the environment," Su said at a
press conference yesterday in Beijing.
The initiative combines legal, economic and administrative means
to fight against pollution, he said, noting that the move would
compliment the central government's efforts to protect the
environment.
The concerted action by the two departments is also expected to
reduce the risks borne by commercial banks.
As China strives to strike a balance between economic growth and
environmental protection, industrial projects that contravene State
environmental policies will be halted, creating potential risks for
the commercial banks that provided funds for the projects, said Dai
Genyou, director of the central bank's Credit Management
Bureau.
"If banks lend money to enterprises that are later ordered to
close down for violating environmental rules, banks will suffer
losses," Dai said.
Once the new credit system is in place, commercial banks will
first check the environmental records of borrowing firms before
lending them money, he added.
Zhang Lijun, deputy director of the SEPA, said information
collected on environment-related law enforcement since 2003 would
be put into the central bank's credit database.
The environmental records of enterprises are only part of the
non-financial data that has been or will be included in the central
bank's credit system to help strengthen commercial banks' lending
security.
The central bank is also cooperating with the social security,
customs, construction, commodity quality supervision, taxation and
legal departments to bring stability to the country's corporate
finance system.
By the end of last year, the corporate credit database had grown
to 11.17 million credit records, 44 percent of which represented
enterprises that had borrowed money from commercial banks.
(China Daily January 10, 2007)
