Manila: The Bangko Sentral ng Pilipinas (BSP) announced that it has extended the regulatory incentives allowing banks to increase sustainable lending under the Single Borrower's Limit (SBL) by up to 15 percentage points above the standard 25 percent cap. This extension will now be in effect until 2028, providing banks with an extended window to enhance their sustainable finance efforts.

According to Philippine News Agency, the original deadline for these incentives was set for January 6, 2026, but the BSP has decided to prolong this period by two years. The extension aims to support banks in maintaining their momentum in sustainable finance. As per Circular No. 1185 issued in 2023, financial institutions are permitted to allocate all funds raised from sustainable bond offerings without adhering to the regular 3 percent reserve requirement.

BSP Governor Eli Remolona Jr. stated that the BSP will continue to support the transition toward a climate-resilient economy. By offering targeted incentives, the BSP aims to channel more credit into green and sustainable activities while simultaneously strengthening the capital market to encourage broader participation among issuers and investors.

The central bank anticipates that this initiative will facilitate ongoing financing for renewable energy, water and wastewater systems, clean transportation, and climate-resilient infrastructure, among other qualifying activities. These projects align with the National Adaptation Plan, Nationally Determined Contributions (NDCs), and the Philippine Development Plan.

The BSP is also considering recalibrating risk weights for climate resilience-focused financing to ensure that the prudential treatment of these exposures remains suitable for the country's domestic conditions. Additionally, it is exploring blended finance mechanisms in collaboration with government agencies, development partners, and the private sector to help de-risk sustainable and climate-resilient projects and broaden investor participation.