IFSCA Guidance note framework Invitation for public comments on the draft

IFSCA Guidance note framework Invitation for public comments on the draft ‘IFSCA Guidance framework on Sustainable and Sustainability linked lending by financial institutions in IFSCs’. Tags: ifsca guidance note, ifsca guidance and counselling, ifsca guidance assam,

IFSCA Guidance note framework Invitation for public comments on the draft

The International Financial Services Centres Authority (IFSCA) has been established as a unified regulator to develop and regulate financial products, services, and financial institutions in India's International Financial Services Centres (IFSCs).

As the climate crisis deepens, economies across the globe are transitioning towards sustainable and low-carbon growth. This transition is fueled by their commitment to meet the Paris Agreement and the Sustainable Development Goals (SDGs). 

The key players IFSCA Guidance note

Banks and financial institutions are some of the key players who can support this transition by directing financial flows to sustainable and climate-friendly solutions via lending or by raising capital for sustainable and sustainability-linked projects. However, there is a need for banks and financial institutions to have the policy to ensure transparency in this process to avoid concerns like greenwashing.

Given the above, the draft guidance framework intends to encourage the IFSC Banking Units (IBU) and Finance Companies/Finance Units (FC/FUs) (undertaking lending activities from IFSCs) to internally develop a comprehensive Board approved policy on green/social/sustainable/sustainability linked lending. 

The guidance intends to provide a broad framework for the adoption of principles aligned with the existing international standards viz. Green/Social Loan Principles developed by Loan Market Association (LMA), Bond Principles developed by International Capital Markets Association (ICMA), Climate Bond Standards by Climate Bonds Initiative, and any other similar recognized standards.

IFSCA proposes to direct the IBUs

IFSCA proposes to direct the IBUs and FC/FUs (undertaking lending activities from IFSCs) registered with it to develop a Board approved policy on sustainable lending within 9 months from the date of issuance of the final framework. 

Further, such entities shall have at least 10 percent of their loan assets in the form of lending to green/social/sustainable/sustainability-linked sectors/facilities, from the financial year beginning April 2023 to/calendar year beginning January 2023. 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.

Also, Read-Presenting you a song sung by a little Ukrainian army for peace

The core components of such policy on lending shall cover aspects such as:

1.  The borrower assessment process,
2. Assessing the use of proceeds and appropriately describing it in the legal documentation of the loan facility,
3. The process to be adopted for project evaluation and selection, management of proceeds,
4.  Reporting mechanism,
5.  Monitoring either internally or through external reviewer, and;
6.  De-classification of lending facilities.

The Draft further provides an illustrative list of eligible green projects, social projects, and certain industry green standards based on which labeling or classification of a facility can be carried out.  Tags: ifsca guidance account, ifsca guidance branch, ifsca guidance board,

The Draft guidance is uploaded on the IFSCA website at the URL https://www.ifsca.gov.in/PublicConsultation.

Also, Read-What is the reason for Russia and Ukraine conflict and NATO?

IFSCA Guidance note framework 

The comments/suggestions are invited from the general public and stakeholders on the draft framework, to reach us on or before March 22, 2022 (i.e. within 21 days from the date of press release).

Tags: ifsca guidance book, ifsca guidance bank, ifsca guidance code, ifsca guidance certificate, ifsca guidance cell, ifsca guidance download, ifsca guidance details, ifsca guidance database, ifsca guidance epf, ifsca guidance example, ifsca guidance form, IFSCA Guidance office, ifsca guidance gst, ifsca guidance gst rate, ifsca guidance hindi, ifsca guidance handbook,

ifsca guidance id, ifsca guidelines, ifsca circulars, ifsca committee, ifsca regulations, ifsca guidance key, ifsca guidance kya hai, ifsca guidance link, ifsca guidance letter, ifsca guidance login, ifsca guidance list,

ifsca act, ifsca upsc, ifsca under which ministry, ifsca banking handbook, ifsca India, ifsca Wikipedia, sebi (ifsc guidelines), ifsca circulars,