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.
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