Enterprises with poor environmental records risk having bank
loan applications rejected under a nationwide credit system that
factors environmental information when considering loan
requests.
The People's Bank of China (PBC), the central bank, is working
with the State Environmental Protection Administration (SEPA) to
promote 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
into a powerful weapon against pollution, he said, noting the move
would complement the central government's environmental
efforts.
This coordination between the two heavyweights is further
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 funding them, 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 installed, commercial banks will
first check the environmental records of borrowing firms before
allowing any money lending, he added.
Zhang Lijun, deputy director of the SEPA, said information
collected on environment-related law enforcement since 2003 would
be placed into the central bank's credit database.
The environmental records of enterprises are only a part of the
non-financial data to be included in the central bank's credit
system to help strengthen commercial banks' lending security.
The central bank is also cooperating with a network of
departments, covering social security, customs, construction,
commodity quality supervision, taxation and legal affairs 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)