BSP extends incentives to boost sustainable finance lending

The Bangko Sentral ng Pilipinas (BSP) has extended the availability of key regulatory incentives to support banks in financing green and sustainable projects for an additional two years starting Jan. 6, 2026.

First introduced in 2023 under BSP Circular No. 1185, the incentives allow banks to exceed the 25 percent Single Borrower’s Limit (SBL) by up to 15 percent specifically for lending to eligible sustainable projects. Banks are also permitted to utilize 100 percent of proceeds from sustainable bond issuances without being subject to the standard 3 percent reserve requirement.

The Monetary Board’s approval to continue these measures aims to sustain the momentum of sustainable finance growth in the country, aligning with national climate and development priorities.

“The BSP will continue supporting the transition toward a climate-resilient economy. By providing targeted incentives, the BSP not only channels more credit into green and sustainable activities but also strengthens the capital market, fostering wider participation among issuers and investors,” BSP Governor Eli M. Remolona, Jr. said.

The extended policy is expected to further facilitate funding for renewable energy, clean transportation, water and wastewater systems, and climate-resilient infrastructure. These sectors are aligned with the Philippines’ National Adaptation Plan (NAP), Nationally Determined Contributions (NDCs), and the Philippine Development Plan (PDP).

In addition to the extension, BSP is reviewing the recalibration of risk weights for climate resilience-focused financing. This aims to ensure that prudential regulatory treatment remains suitable to domestic market conditions and evolving sustainability goals.

The central bank is also exploring blended finance strategies with government agencies, development partners, and private institutions to help de-risk investments and widen the pool of participants in sustainable and climate-resilient finance initiatives.

Before the end of the extended incentive window in 2028, BSP plans to conduct a comprehensive review of market dynamics, implementation results, and potential refinements to further scale adaptation finance and advance long-term environmental and economic resilience.