BI Tightens Environmental Banking Rules

BI Tightens Environmental Banking RulesBank Indonesia will improve regulation on banks in the provision of environmentally sound credit with the obligation to provide environmental audit reports, said Bank Indonesia Deputy Governor Siti Ch Fadjrijah.

"The provisions of PBI 7/2/2005 have stipulated that one of the criteria in assessing the quality of bank earning assets is the existence of environmental analysis but we have no criteria that can assess the environmental analysis is good or not," he said on the sidelines of the workshop "Roles and benefits implementation of sustainable development for the banking community "in Batam on Thursday.

For that reason, in the future Bank Indonesia will create new Bank Indonesia Regulation (PBI) or fix the old PBI in order for the submission or extension of major credits there must be an environmental audit report conducted by an independent auditor recognized by the Ministry of Environment.

He explained that the improvement of PBI on the provision of credit for companies with environmental insight is expected to not provide additional burden for banks in assessing debtors who apply for credit.

"So we will only request that the debtor has brought a report on the environmental audit," he said.

Siti also suggested that banks help in the management of the environment and living resources based on long-term development of life.

"A lot of projects are financed by the banking environment, so banks can encourage these projects to help conserve the environment and social norms," ??he said.

The financing of an environmentally sound project will improve the bank's competitiveness as it will avoid reputational risks and legal risks.

Meanwhile, President Director of Bank BNI Sigit Pramono in the same place said his bank has applied environmental analysis in conducting an analysis of the proposed loan proposed by the debtor.

"We have to admit that banks may have a contribution in damaging the environment, so that it must be repaired immediately," he said.

On that occasion, Sigit also signed the United Nation Environtment Program Finance Initiative (UNEP FI) membership form, an institution that oversees environmentally sound banking practices.Bank BNI is the first bank in Indonesia to become a member of UNEP FI, ??which currently has 170 members of international financial institutions. (* /

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