Responsible Lending Policy
The Bank has incorporated the international framework and concept of sustainable development, together with the Bank’s core values and ESG principles, into its business framework to conduct business and provide responsible banking services and operations. In this regard, the Bank has established a credit consideration process and effective risk management guidelines that are applied throughout the process, from customer screening and a credit process that covers environmental, social and governance risks, to procedures for assessing, controlling and monitoring risks.The Bank finances businesses or industries in the Bank’s inclusion list, which the Bank defines as having potential as well as aligning with ESG goals and the national strategic plan promoting the bio-circular-green (BCG) economy model. Such financing programmes include green lending; loans for energy conservation; loans for businesses with good governance; loans for businesses that promote job creation, quality of life and the country’s overall economic development; SME loans; R&D loans; and loans for job retention. On the other hand, the Bank does not finance businesses or individuals on the exclusion list who are deemed unwanted by the Bank. In each process, appropriate risk identification, assessment, control, monitoring and management are required to prevent any damage that may occur to the Bank in the future.
Responsible Lending (RL)
Responsible Lending (RL) means providing financial services while taking into consideration the borrower’s other debt commitments and true repayment ability to prevent the borrower from taking on too much debt, having liquidity problems or having too much household debt, which would affect their daily lives. Credit consideration and approval must be carried out cautiously and transparently. Moreover, there must not be any discrimination on the grounds of the personal loan applicant’s race, ethnicity, religion, sex or marital status. The Bank must have guidelines for granting business loans to applicants who observe laws and the Bank’s regulations, are credible and have sufficient repayment ability. The Bank’s credit process also takes into account direct and indirect impact on the environment, society and governance.
- Environmental impact: The Bank takes into account the impact the loan may have on the environment, which may, in turn, impact the Bank’s reputation, for example, businesses that, without having appropriate and sufficient measures, emit greenhouse gases and/or cause climate change; deforestation; biodiversity loss; water, noise and air pollution; or produce hazardous material. The Bank also places importance on financing eco-friendly businesses and projects that have a positive impact on the community, for example, green energy loans, energy saving loans, R&D loans, etc.
- Social impact: The Bank takes into account the risks or negative impact on society related to human or labour rights violations, including a working environment that does not meet occupational health and safety standards or affects the community’s ways of life, as well as loans that cause too much household debt. The Bank also provides financing to businesses and projects that contribute to social development in areas such as quality of life, health and sanitation, education, the country’s grassroots economy and stakeholder engagement.
- Governance impact: The Bank finances businesses that operate and engage with their stakeholders, such as shareholders, investors, employees, suppliers, creditors, government agencies, communities and societies, with good governance. The businesses must not be involved in any form of corruption that may harm the reputation of the businesses or their management. The businesses must also have fully disclosed risk management, internal auditing, monitoring and transparency.
The Bank’s customers or projects must go through a screening procedure in which their ESG impacts are assessed before entering the credit approval process. After the credit line is approved, they must be monitored to ensure that they use the loans according to their objectives and conditions. Moreover, the credit limit must be reviewed at prescribed intervals to ensure that they proceed appropriately throughout the loan period.
- Illegal or immoral businesses, or those that violate good corporate governance principles.
Businesses or projects that have a detrimental impact on the environment or disturb an ecosystem, a cultural conservation site, or an important archaeological site, which include:
2.1. areas in mangrove forests, natural protected areas, parks or wildlife sanctuaries as announced by relevant government agencies
2.2. UNESCO World Heritage Sites registered in Thailand and/or sites of similar nature elsewhere
2.3. conservation sites according to Ramsar Convention on Wetlands registered in Thailand and/or sites of similar nature elsewhere
2.4. protected areas according to the International Union for Conservation of Nature (IUCN) registered in Thailand and/or areas of similar nature elsewhere.
- Trade in wildlife and wildlife derivatives of protected animals under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
- Hoarding businesses or businesses behaving in the way of hoarding products to corner the market, which has an impact on economic stability or violates regulations of a relevant government agency or regulator.
- Businesses that engage in armament manufacturing or trading (except for Thai government agencies or for supplying to Thai government agencies).
- Businesses that engage in human rights violations or projects that entail social risks, for example, child labour, illegal alien labour, forced labour, etc.
Businesses or projects that have a significant impact on the environment and society, which include:
7.1. production of pesticides, radioactive materials and substances that destroy the atmosphere and are in breach of laws or international conventions/agreements (for example, prohibition on the production, importation, exportation or possession of Category 4 hazardous substance as defined in the Hazardous Substance Act B.E. 2535 ; prohibition on the development, production, amassing of chemical weapons as defined in the Hazardous Substance Act [No.2] B.E. 2544 ; of banned chemicals or severely restricted chemicals as defined in The Rotterdam Convention; or of persistent organic pollutants as prescribed in the Stockholm Convention.)
7.2. treatment (collection, treatment and disposal) of hazardous or radioactive waste
7.3. coal mining or trading, except for businesses with carbon emission controls
7.4. nuclear energy business.
- A person who is deemed guilty by the Office of the National Anti-Corruption Commission (NACC).
- A person who uses influence peddling.
- A person deemed a quasi-incompetent or incompetent person by the court.
- An unacceptable person such as an alcoholic, a gambler, etc.
These are examples of projects in 2021 that the Bank complied with the ESG framework.
Financing customers in high-speed electric rail industry means establishing the country’s infrastructure which will enhance its competitiveness and the quality of life of its people, as well as modernize the society with ‘the rail economy’. This will spur growth in trade, investment and employment. The development of the rail economy will greatly enhance economic growth and lower transportation cost and time. In 2021, the Bank provided a credit limit of 6,837 million Baht to support an electric public transportation project which is part of an effort to promote the use of electric transportation and reduce the use of diesel locomotives and petroleum fuel vehicles.
Generating alternative electricity power from agricultural waste is a driving force for investment in renewable energy, which would contribute to reducing energy importation and creating jobs and income for every party involved, from the generators to consumers. In 2021, the Bank provided a credit limit of 1,012 MB for the building of a biomass (bagasse) power plant with 22 MWh generation capacity.
Biodiesel is an alternative diesel fuel that has the same combustion properties as petroleum diesel. and can be used interchangeably It can also decompose on its own. According to biological processes in nature and is not toxic to the environment. In 2021, the Bank provided a credit limit of 700 MB for this project.