The International Financial Services Centres Authority on 26th April 2022 has notified that from the FY, beginning April 01, 2023, the IBUs (IFSCA Banking Units) and FC/FUs (Finance Company/Finance Units) undertaking lending as one of the permitted activities shall have atleast 5% of thei rgross loans and advances directed towards green/social/sustainable/sustainability-linked sectors/facilities.
The 5% target shall be computed on incremental loans and advances in a financial year i.e. in comparison to the amount as at the end of the previous financial year. In case, if the IBU or FC/FU is unable to meet the above targets it shall report to the Authority explaining reasons for non-compliance of the same and shall provide future action plan towards ensuring compliance with this framework
An entity licensed/registered post issuance of this framework shall get a time period of 12 months, from the date of commencing its operations, to put in place a Board approved policy. The lending target shall be applicable from the beginning of the new financial year, post adoption of the Board approved policy.
The IBUs and FC/FUs may establish an in-house process to assess the borrower and the eligibility of loan facility (project/trade/ working capital finance facilities, etc.) in meeting the identified Environmental/Social/Sustainable objectives. Individual facilities may be assessed on a case-to-case basis for whether the level of ‘green’ is sufficient, whether the borrower and the lenders have mutually agreed to classify such facilities as ‘green’, ‘social’ or ‘sustainable’ and to put measures in place to avoid green washing and similar instances.
