Dr. Muhammad Saleem,

State Bank of Pakistan

Conventional Role of Central Banks

Regulation of Liquidity

Ensuring the Soundness of Financial System

Exchange Rate Management And Balance of Payments

Managing Payment Systems

Specialized Role:

Priority sector financing

NEED TO CHANGE FOCUS Two major issues to be focused by Central banks;

Financial Inclusion

Climate Financing

%age adult population with an Account -2016

95

70

15

47

35

17

62

0

10

20

30

40

50

60

70

80

90

100

Highincome:OECD

East Asia &Pacific

Middle East South Asia Sub-SaharanAfrica

Pakistan World

Source: Indian data http://www.financialexpress.com/article/industry/banking-

finance/credit-deposit-ratio-near-4-year-low/146888/Other Countries: http://www.statista.com/statistics/276285/loan-to-deposit-ratio-in-the-global-

bank-industry/

ADVANCES TO DEPOSITS RATIO

95

6172

96

116

75

47

0

20

40

60

80

100

120

140

BanksWorldWide

China UnitedStates

Japan Europe India Pakistan

Green/ Sustainable Banking

Green Banking promotes environmental friendly

practices in banks in their operations & activities

These activities in banks could include:

lending to environment friendly projects,

promoting resource conservation/efficiency,

promoting paper-less environment

operating green branches etc

Role of Central Bank in Promoting Climate Investment

• Green Banking Guidelines

• Prudential regulation for project financing

Enabling Regulatory Framework

• Credit Guarantee Facility (Risk sharing )

Market Development

• Refinance/Credit Line for climate financing

Public Financing Mechanism

• Capacity building Workshops/Seminars/Conferences

Awareness & Capacity Building

How is banking sector relevant to Climate Change?

Direct

Indirect

• Through on-lending to business/ industries which include sectors like steel, paper, cement, chemicals, fertilizers, power, textiles etc

Banking sector interacts with the environment in

two ways:

Day to day operations such as use of paper, electricity, stationary, lighting, air conditioning, electronic equipment etc

Green Banking for Development

The motives for adoption of GB exists both for banks as

well as regulator(s) i.e. Central Banks

For Banks, going green means:

Economic benefits,

Avoidance of undesired negative publicity from societal groups

Compliance with the regulations

Corporate Social Responsibility

Guidelines will be applicable to all banks and DFIs

Guidelines intend to set minimum standards for a fair and competitive environment.

Enabling Regulatory Framework - Green Banking Guidelines

Scope of Applicability

Reduce vulnerability of financial system from risks arising from theenvironment

Facilitate banks/ DFIs to fulfill their responsibilities for protection ofenvironment

Encourage financing for transformation of economy into a resourceefficient and climate resilient one

Objectives of Green Banking Guidelines

Green Banking Guidelines

Responsibilities, Management and Organization

Environmental Risk Management Guidelines

Guidelines on Green Business Facilitation

Guidelines on Own Impact Reduction

Key Components of Green Banking Guidelines

Board of Directors has overall responsibility including approvalof green banking policies, strategies and budgets.

The roles and responsibilities of management at all tiers to bealigned with green banking policies

Responsibilities for Green Banking

Environmental Risk Management:

EnvRM to be integrated with existing credit risk managementpolicies and procedures

EnvRM is applicable for all banking activities and clients

EnvRM is for all new exposures & extensions of existingexposures

EnvRM be designed to ensure compliance with applicableenvironmental laws

EnvRM should be forward looking

Banks/ DFIs to develop internal EnvRM systems, proceduresand manuals

Green Banking Guidelines

Green Business Facilitation:

Green product development

Green Financing Portfolio

Earmarking of Funds for Green financing portfolio /investments

Green advisory service

Green Marketing

Multilateral Resources for Environmental activities

Green Climate Fund

Green Banking Guidelines

Own Impact Reduction:

Impact Reduction Targets

Resource Efficiency MeasuresWaste Reduction Measures

Green Branches/Offices

Renewable Energy based ATMs /

branches / offices

Paperless Banking Operations

Green IT Infrastructure

Green Banking Guidelines

SBP Green Banking Initiatives Regulation of branchless banking

SBP’s Refinance Scheme for Renewable Energy

Scheme for energy efficiency financing

Refinance and risk sharing facilities for SME and

Agriculture sector

Financing for warehouse and solar tube wells for agriculture

sector

Partnerships with bilateral & multilateral

organizations

Member of the Sustainable Banking Network (SBN)

Facilitation in Accreditation to Green Climate Fund

Awareness and capacity building on Green Banking

and RE Scheme

Thank you