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Exploring Green Bonds: Sampath Bank’s Leap Towards Sustainable Finance

Sampath Bank in earnest discussions to launch green bonds

In a bold move towards championing sustainable finance, Sampath Bank, under the guidance of its new leadership, is in the process of exploring the potential of green bonds. This initiative is part of the bank’s broader commitment to support renewable energy projects and signifies a decisive step towards environmental stewardship in the financial sector.

The bank has already begun engaging with key development financial institutions to discuss the intricacies of issuing green bonds and establishing green credit lines. These discussions aim to harness the bank’s established prowess in financing renewable energy projects, covering various domains such as wind, solar, and hydro energy.

“Our engagement in renewable energy projects has been comprehensive, and we are now looking to expand our impact through green bonds. We believe that there is an opportune moment on the horizon for us to enter the market,” said a spokesperson from Sampath Bank.

The momentum for green financing received a significant boost recently when regulations were introduced to facilitate the listing and trading of green bonds. This regulatory enhancement opens a new chapter for funding sustainable projects. Presently, there is a dedicated fund of US$1 billion for renewable energy projects, with several other initiatives ranging between $20 million to $30 million. Among these, a notable $500 million project backed by Adani is underway.

On the international front, Sampath Bank remains keen on exploring growth opportunities beyond domestic borders through strategic investments. “Our approach towards international expansion is one of careful consideration, aligning with our vision, values, and the expectation of enhancing shareholder value,” the spokesperson added.

The recent increase in the value-added tax to 18 per cent has undeniably affected consumer spending and demand for goods and services. Despite these challenges, the bank remains optimistic, citing positive signs such as economic growth, a boost in tourism, and an increase in private credit demand. These factors are hoped to mitigate the impact of the tax hike on the overall performance of the industry.

Regarding the banking sector’s landscape, the decline in income from government securities has shifted the focus towards broadening credit outreach to vitalize key economic sectors. This strategy is seen as crucial for unlocking the economy’s potential and ensuring sustainable growth.

With an economic growth prediction of around 1.5 per cent for the year, there is a noticeable shift in client sentiment from pessimistic to cautiously optimistic, especially within the tourism sector. This optimism is not confined to tourism alone but extends to related industries, indicating a broader economic awakening.

Furthermore, the bank is confident of not witnessing an increase in Stage 3 loan advancements. This confidence is bolstered by a positive shift in the market sentiment and a conducive interest rate environment, encouraging customers to seek feasible settlement plans for non-performing loans.

The call for consolidation in the banking sector is acknowledged as a means to build stronger and more capable institutions. This is especially relevant for leveraging opportunities such as the Port City and regional expansion. Despite the potential benefits, the bank recognizes the complexities and risks involved in the consolidation process.

Sampath Bank’s foray into green bonds, coupled with its strategic initiatives both locally and internationally, reflects a forward-thinking approach that balances economic ambitions with environmental responsibilities. As these discussions advance towards fruition, Sampath Bank is poised to set a precedent in sustainable financing within the region.

Lily Greenfield

Lily Greenfield is a passionate environmental advocate with a Master's in Environmental Science, focusing on the interplay between climate change and biodiversity. With a career that has spanned academia, non-profit environmental organizations, and public education, Lily is dedicated to demystifying the complexities of environmental science for a general audience. Her work aims to inspire action and awareness, highlighting the urgency of conservation efforts and sustainable practices. Lily's articles bridge the gap between scientific research and everyday relevance, offering actionable insights for readers keen to contribute to the planet's health.

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