Central Bank Encourages Financial Institutions to Tailor Loan Terms for Green Factories Based on Funding Needs

Deep News12-12

On December 12, the Ministry of Industry and Information Technology held a press conference titled "Leveraging Green Finance Policies to Support Green Factory Development." Yu Jian, Deputy Director of the Credit Market Department at the People's Bank of China (PBOC), addressed questions on how green finance policies can bolster green factory initiatives.

Yu emphasized that green factories, as core units of green manufacturing, account for over 20% of the total output value in the manufacturing sector and are pivotal to achieving China's "dual carbon" goals. The newly issued notice outlines four mechanisms to enhance financial services for green factories:

1. **Collaborative Promotion Mechanism**: After application and compliance review, PBOC will coordinate financial institutions to align financing needs with green factory projects, ensuring robust financial support. Joint supply-demand matching events will also be organized to improve policy awareness and coverage.

2. **Optimized Financial Supply Mechanism**: Financial institutions are encouraged to develop tailored support plans for green factories, streamline approval processes, and prioritize key projects through internal pricing incentives, liability exemptions, and dedicated loan channels. Flexible loan terms—such as revolving credit and medium-to-long-term loans—should be designed to match the funding cycles of green factories. Additionally, direct financing channels, including green and transition bonds, will be expanded to boost investment in green factory construction.

3. **Comprehensive Support Mechanism**: Structural monetary tools like the carbon reduction support facility and re-lending programs for tech innovation will incentivize greater credit allocation. Risk-sharing measures, such as fiscal interest subsidies or compensation funds, will be promoted, alongside policy-backed guarantees to enhance creditworthiness for green factories. Outstanding financial institutions in this sector may receive rewards.

4. **Risk Mitigation Mechanism**: PBOC will strengthen collaboration with industrial regulators to ensure funds are directed toward genuine green projects, improving precision and effectiveness while preventing "greenwashing."

The initiative underscores PBOC's commitment to aligning financial resources with sustainable industrial growth.

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