LPS Chair Asks For Banking To Increase Credit Distribution To The Green Sector

JAKARTA - Banking in Indonesia is considered to have played a major role in funding as an effort to reduce carbon emissions.

Chairman of the LPS Board of Commissioners Purbaya Yudhi Sadivewa said the banking sector has a large capacity to be able to contribute significantly, especially in providing financing to fund various efforts to reduce national emissions.

"For example, in the first half of 2023, several banks have disbursed quite a lot of green credit. The green credit financing objects also vary, ranging from renewable energy projects, green office building, environmentally friendly vehicles and environmental conservation," said Purbaya, Wednesday, September 27.

For this reason, Purbaya also encourages the distribution of bank credit to green sectors to continue. In addition to achieving the national emission reduction target, he said, several literatures also conclude that serious banks considering sustainability factors tend to have lower operational risks and reduce bank vulnerability during the financial crisis period.

He also encourages synergy between financial and banking regulators to support the development of a green ecosystem in the financial sector.

"For example, the Ministry of Finance has compiled various fiscal policies to encourage sustainable finance," he said.

Then Bank Indonesia has launched various macroprudential policies aimed at encouraging green financing by banks.

OJK itself has also launched and implemented a sustainable financing roadmap in Indonesia.

"Of course one example is the official opening of the carbon exchange on September 26, 2023 yesterday," he said.

Meanwhile, LPS itself as the deposit guarantor authority also provides support, including the policy of part of investing in bond instruments that are oriented towards sustainability or sustainability and facilitating green investment.

"In the future, LPS will also provide support in the form of a mangrove planting program with a target of 100 hectares for the next three years," concluded Purbaya.