Green Banking - a new frontier for the banks in Pakistan.

State Bank of Pakistan (SBP) through its recent initiatives and actions has focused its attention on finance-deficient areas such as financial inclusion, low cost housing facility, agricultural credit, SME finance and most importantly, the Green Banking phenomenon. In accordance with its strategic policy, given the importance of SMEs being attached to our economic development, SBP is playing a facilitator's role, aimed to increase the orderly flow of financing to SMEs. It has set the principal targets to be achieved in SME financing till 2020 for increasing SME's share from existing 8 percent private sector credit to 17 percent by 2020 and increase the number of borrowers from existing 183,606 to 500,000 by 2020. SBP had released 9 pillars of Policy for Promotion of SME Finance back in December 2017, which included among others, improvement in regulatory framework, leveraging technology to promote SME financing and simplifying taxation regime for SMEs.

Another broad-based policy framework, in the shape of Green Banking guidelines was also issued by SBP. This needs immediate attention of our banking and finance sector, because of its vital and crucial nature. But Green Banking is still in infantile stage. In view of deep concern for environmental sustainability, which has created the concept of Green Banking, it would be of great advantage for the banking and the industrial sectors, ultimately passing out the benefits to the national economy and ecology. The ecological disability has led to massive emissions of carbon dioxide and greenhouse gases. Green Financing is an integral part of Green Banking and also the overall concept of Green Movement, currently much hyped all over the globe. The Green Movement is a global movement relating to deep worries for environmental conservation and betterment of the health of our environment. The Green Movement also strongly advocates for the protection, reclamation and the overall improvement of our environment. It aims to promote environmental and climate friendly practices to decrease carbon footprints emanating from the banking activities. It enjoins on the banks to take into account the environmental challenges and to abide by best practices to lessen the adverse impact.

Green Banking is vital in avoiding some of three most vulnerable risks: Credit Risk, in view of climate changes taking place all over the world including global warming and topsy-turvy climatic upheavals, there will be direct or...