Government-owned Land Bank of the Philippines (Landbank) has enhanced its sustainable financing via its own GreenGrowth Deposit, a deposit account designed to support social and environmental projects such as renewable energy and other green technologies.

In a statement, Landbank president and CEO Lynette V. Ortiz said the new sustainable deposit product should encourage clients to be “part of this transformative journey”.

She said Wednesday, Feb. 14, that the GreenGrowth Deposit “reflects our dedication to creating a greener and more sustainable future.”

Ortiz also said that by opening a peso deposit account with the bank, customers will create “ripples of meaningful change” since these funds will support social and sustainable projects “while providing (a) secure avenue for financial returns.”

The GreenGrowth Deposit – available for both individuals and private institutions -- has tiered interest rates as high as 4.25 percent per annum.

In addition, it has a fixed one-year term with a minimum placement of P50,000 and a 2.25 percent interest rate per annum. “Customers can enjoy higher returns of up to 4.25% interest rate for deposits amounting to P5 million and above,” said the bank.

Landbank noted that the deposited funds under GreenGrowth Deposit “will further boost (Landbank’s) thrust of sustainable financing, focusing on renewable energy projects, green technologies, and other eco-friendly initiatives and investments.”

“The funds will be also allocated for community-centric programs aimed at enhancing social welfare,” said the bank.

Landbank is the country’s second biggest bank and the largest state-controlled financial institution.

Last year, the bank posted a net income of P40.3 billion, up by 33.8 percent from P30.1 billion in 2022.

In December last year, the Bangko Sentral ng Pilipinas (BSP) approved temporary measures to incentivize banks to release sustainable loans in exchange for additional single borrower’s limit (SBL) and zero reserves requirement.

The additional measures for sustainable finance will be implemented for two years in the form of extra lending capability and reduced reserve requirement rate on sustainable bonds issued by banks.

While both measures will be available to banks for a period of 24 months only, the BSP could still conduct regular reviews as “warranted by circumstances” in case they need to reassess the perks or maybe to extend validity of the incentives for green lending.

BSP Governor Eli M. Remolona Jr. said they will continue to “identify and create appropriate incentives that are within our mandates (to empower) the banking system to steer capital flows toward growing green or sustainable investments and accelerate the development of solutions addressing just transition and adaptation-related challenges.”

Remolona signed BSP Circular No. 1185 for the “Grant of Additional Single Borrower's Limit for Financing Eligible Projects and Zero Percent Reserve Requirement Rate Against Sustainable Bonds” on Dec. 13, 2023.

In 2022, the BSP conducted a survey among selected central banks to find out which approaches have been done in embedding sustainability-linked components in their existing lending facilities.

According to the survey, providing lower interest rates to banks to finance green or sustainable projects and activities at lesser cost is the most common incentive given by central banks.

In another survey which was also done in 2022 among big banks in the country, the BSP was able to gather current lending practices for green or sustainable projects and to ask banks if they are interested in availing of BSP credit facilities.