The Shanghai Head Office of the People’s Bank of China (“PBC”), all branches and operations offices of the PBC, all central sub-branches of the PBC in capital cities of provinces (autonomous regions); the China Development Bank, all policy banks, state-owned commercial banks, and joint-stock commercial banks, the Postal Savings Bank of China, Bank of Beijing, Bank of Shanghai, and Bank of Jiangsu:

For the purposes of enhancing the capability of green finance to support high-quality development and green transformation, implementing the spirit of the Guiding Opinions on Building the Green Financial System (No. 228 [2016], PBC) and other documents, and striving to develop green credit, the PBC has developed the Plan for the Green Credit Performance Evaluation of Banking Depository Financial Institutions (for Trial Implementation) (hereinafter referred to as the “Plan”, see Annex), which is hereby issued to you, and the relevant matters are announced as follows:

I. The Plan provides a basic reference for the branches of the PBC in conducting green credit performance evaluation. The branches of the PBC shall strengthen the arrangement and coordination, and, in accordance with the requirements set out in the Plan and in consideration of actual conditions within their respective jurisdictions, spare no time in developing detailed rules for the implementation of the green credit performance evaluation of banking depository financial institutions (legal persons) within their respective jurisdictions and ensuring the effective implementation of such evaluation. Furthermore, they shall maximum the duties and roles of the central bank, and put forth effort to enhance the green credit performance of financial institutions.

II. The year 2018 is the trial period of the Plan, during which whether a financial institution that has commenced business for less than three years and are involved in data availability and reliability issues will fall into the scope of evaluation targets shall be determined by the PBC’s branches.

III. During the trial period of the Plan, the research departments of the PBC’s branches shall, within 10 days upon completion of the evaluation each time, submit the evaluation results of green credit performance of banking depository financial institutions (legal persons) within their respective jurisdictions for the last quarter to the Research Bureau of the PBC. The evaluation results shall not be published without being confirmed by the Research Bureau of the PBC.

IV. The research departments of the PBC’s branches shall vigorously ramp up their efforts to follow up and monitor the green credit performance evaluation of banking depository financial institutions (legal persons) within their respective jurisdictions, and ensure that the green credit performance evaluation will be made smoothly in compliance with laws and regulations. Any new issues or situations arising out of the implementation of the Plan shall be reported to the Research Bureau of the PBC in a timely manner.

The Shanghai Head Office of the PBC, all branches and operations offices of the PBC, and all central sub-branches of the PBC in capital cities of provinces (autonomous regions) shall forward this Notice to relevant financial institutions within their respective jurisdictions and effectively organize the implementation.

Annex: Plan for the Green Credit Performance Evaluation of Banking Depository Financial Institutions (for Trial Implementation)

July 11, 2018

Annex

Plan for  the Green Credit Performance Evaluation of Banking Depository Financial Institutions (for Trial Implementation)

I. General Provisions

1. This Plan is developed to implement the spirit of the Guiding Opinions on Building a Green Finance System (No. 228 [2016], PBC) and other documents, and guide the banking depository financial institutions in increasing their credit support for green and environmentally-friendly industries.

2. “Green credit performance evaluation” means an institutional arrangement under which the PBC and its branches conduct comprehensive evaluation of the green credit performance of banking depository financial institutions in accordance with the provisions of credit policies and grant incentives to or impose restraints on banking depository financial institutions on the basis of the evaluation results.

3. The green credit performance evaluation will be conducted for banking depository financial institutions (legal persons), remain green oriented, focus on business sustainability, grant incentives and impose restraints; and will be promoted steadily under the principles of objectiveness, fairness and justice, showing respect to the compliant and independent business operations of banking depositary financial institutions.

4. The PBC will be responsible for the green credit performance evaluation of 24 major banking depository financial institutions, while the Shanghai Head office of the PBC, all branches and operations offices of the PBC, and all central sub-branches of the PBC in capital cities of provinces (autonomous regions) will be responsible for the green credit performance evaluation of banking depository financial institutions (legal persons) within their respective jurisdictions.

5. The green credit performance evaluation will be conducted on a quarterly basis.

II. Evaluation Indicators and Methods

6. The indicators for green credit performance evaluation are classified into two categories: quantitative indicators (weight: 80%) and qualitative indicators (weight: 20%). At the later stage, the PBC will adjust the weights of indicators appropriately based on variations in conditions.

7. The quantitative indicators for green credit performance evaluation include five items: the proportion of green loan balance, the proportion of green loan balance share, the ratio of green loan increment, the year-on-year growth of green loan balance and the non-performing green loan ratio (see Annex 1 for the quantitative indicator system, instructions and scoring method).

8. The qualitative scores for green credit performance evaluation shall be determined by the PBC in comprehensive consideration of routine business operations of banking depository financial institutions and by reference to the qualitative indicator system (see Annex 2 for the qualitative indicator system, instructions and scoring method).

9. The data of quantitative indicators for green credit performance evaluation shall be collected in accordance with the Notice by the People’s Bank of China of Establishing Special Statistical System for Green Loans (No. 10 [2018], PBC), based on the loans granted in RMB and foreign currencies. The balances of loans domestically granted in RMB and foreign currencies by banking depository financial institutions shall be computed based on the data of loans granted in RMB and foreign currencies, among the social financing, to the real economy.

III. Evaluation Results and Application

10. The evaluation results of green credit performance shall be incorporated into the macro-prudential assessment for banking depository financial institutions.

11. The PBC will correct and irregularly check the qualitative indicator data submitted by banking depository financial institutions. The PBC will seriously punish an institution that is found to have failed to provide truthful evaluation data, in accordance with applicable provisions, and order it to make rectification within the specified time limit.

IV. Supplementary Provisions

12. The branches of the PBC shall, pursuant to this Plan, promptly develop detailed rules for the implementation of green credit performance evaluation that are in line with the actual conditions of their respective jurisdictions and organize the implementation of these rules.

13. This Plan may be adjusted in due time depending on green credit policies and variations in business development, and shall be subject to interpretation by the PBC.

Annexes:

1. Quantitative Indicator System, Instructions and Scoring Method for Green Credit Performance Evaluation

2. Qualitative Indicator System, Instructions and Scoring Method for Green Credit Performance Evaluation

Annex 1:

Quantitative Indicator System, Instructions and Scoring Method for Green Credit Performance Evaluation

I. Quantitative Indicator System for Green Credit Performance Evaluation

Indicator (weight)	Scoring benchmark	Full score
Proportion of green loan balance (20%)	Vertical: Average proportion of green loan balance of the banking depository financial institution for the last three periods	4
	Horizontal: Average proportion of green loan balance of all participating banking depository financial institutions for the current period	16
Proportion of green loan balance share (20%)	Vertical: Average proportion of green loan balance share of the banking depository financial institution for the last three periods	4
	Horizontal: Average proportion of green loan balance share of all participating banking depository financial institutions for the current period	16
Ratio of green loan increment (20%)	Vertical: Average ratio of green loan increment of the banking depository financial institution for the last three periods	4
	Horizontal: Average ratio of green loan increment of all participating banking depository financial institutions for the current period	16
Year-on-year growth of green loan balance (20%)	Vertical: Average year-on-year growth of green loan balance of the banking depository financial institution for the last three periods	4
	Horizontal: Average year-on-year growth of green loan balance of all participating banking depository financial institutions for the current period	16
Non-performing green loan ratio	Vertical: Average non-performing green loan ratio of the banking depository financial institution for the last three periods	4
	Horizontal: Average non-performing green loan ratio of all participating banking depository financial institutions for the current period	16

II. Instructions on Quantitative Indicators for Green Credit Performance Evaluation

1. Proportion of green loan balance

Proportion of green loan balance = green loan balance of the banking depository financial institution at the end of the current period / balance of loans domestically granted in RMB and foreign currencies of the banking depository financial institution at the end of the current period × 100%.

(1) Vertical benchmark: the average proportion of green loan balance of the banking depository financial institution for the last three periods shall be computed by the arithmetic average method.

(2) Horizontal benchmark: average proportion of green loan balance of all participating banking depository financial institutions for the current period = green loan balances of all participating banking depository financial institutions at the end of the current period / balances of loans domestically granted in RMB and foreign currencies of all participating banking depository financial institutions at the end of the current period × 100%.

2. Proportion of green loan balance share

Proportion of green loan balance share = green loan balance of the banking depository financial institution at the end of the current period / green loan balances of all participating banking depository financial institutions at the end of the current period.

(1) Vertical benchmark: the average proportion of green loan balance share of the banking depository financial institution for the last three periods shall be computed by the arithmetic average method.

(2) Horizontal benchmark: average proportion of green loan balance share of all participating banking depository financial institutions at the end of the current period = 1 / the number of participating banking depository financial institutions in the current period.

3. Ratio of green loan increment

Ratio of green loan increment = (green loan balance of the banking depository financial institution at the end of the current period - green loan balance of the banking depository financial institution at the end of the previous period) / (balance of loans in RMB and foreign currencies of the banking depository financial institution at the end of the current period - balance of loans in RMB and foreign currencies of the banking depository financial institution at the end of the previous period) × 100%.

(1) Vertical benchmark: the average ratio of green loan increment of the banking depository financial institution for the last three periods shall be computed by the arithmetic average method.

(2) Horizontal benchmark: average ratio of green loan increment of all participating banking depository financial institutions for the current period = (green loan balances of all participating banking depository financial institutions at the end of the current period - green loan balances of all participating banking depository financial institutions at the end of the previous period) / (balances of loans in RMB and foreign currencies of all participating banking depository financial institutions at the end of the current period - balances of loans in RMB and foreign currencies of all participating banking depository financial institutions at the end of the previous period) × 100%.

4. Year-on-year growth of green loan balance

Year-on-year growth of green loan balance = (green loan balance of the banking depository financial institution at the end of the current period - green loan balance of the banking depository financial institution at the end of the same period of last year) / green loan balance of the banking depository financial institution at the end of the same period of last year × 100%.

(1) Vertical benchmark: the average year-on-year growth of green loan balance of the banking depository financial institution for the last three periods shall be computed by the arithmetic average method.

(2) Horizontal benchmark: average year-on-year growth of green loan balance of all participating banking depository financial institutions for the current period = (green loan balances of all participating banking depository financial institutions at the end of the current period - green loan balances of all participating banking depository financial institutions at the end of the same period of last year) / green loan balances of all participating banking depository financial institutions at the end of the same period of last year × 100%.

5. Non-performing green loan ratio. Non-performing green loan ratio = non-performing green loan balance of the banking depository financial institution at the end of the current period / green loan balance of the banking depository financial institution at the end of the current period.

(1) Vertical benchmark: the average non-performing green loan ratio of the banking depository financial institution for the last three periods shall be computed by the arithmetic average method.

(2) Horizontal benchmark: average non-performing green loan ratio of all participating banking depository financial institutions at the end of the current period = non-performing green loan balances of all participating banking depository financial institutions at the end of the current period / green loan balances of all participating banking depository financial institutions at the end of the current period.

III. Scoring Method of Quantitative Indicators for Green Credit Performance Evaluation

1. Compute the actual data value of each indicator (“indicator value”) and mark it as “X”; in particular, convert the non-performing green loan ratio to “1-X”, so as to make all indicators move in the same direction and more comparable.

2. Compute the benchmark data value (“benchmark value”) of each indicator in different scoring benchmarks (of which, vertical benchmark value is marked as “B1”, and horizontal benchmark value “B2”).

3. Compute the standard deviation value (“standard deviation”) of each indicator in different scoring benchmarks (of which, vertical standard deviation is marked as “Std1”, and horizontal standard deviation “Std2”).  Std1 is computed based on the data of the banking depository financial institution for the last three periods, and Std2 is based on the data of all banking depository financial institutions for the current period.

4. All indicator values based on a vertical benchmark are scored in the following ways:

(1) Set the vertical benchmark value B1 as the baseline, and divide the indicator value into two intervals, of which: Interval 1 is [B1-2×Std1, B1], and Interval 2 is (B1, B1＋2×Std1).

(2) If the indicator value ≤B1-2×Std1, the score is 20.

(3) If the indicator value falls into Interval 1, the score is 60-(B1-X1) / (2×Std1) × 40 (X1 stands for all indicator values that fall into Interval 1).

(4) If the indicator value = B1, the score is 60.

(5) If the indicator value falls into Interval 2, the score is 60＋(X2-B1) / (2×Std1)× 40 (X2 stands for all indicator values that fall into Interval 2).

(6) If the indicator value ≥B1＋2×Std1, the score is 100.

5. All indicator values based on a horizontal benchmark are scored in the following ways:

(1) Set the horizontal benchmark value B2 as the baseline, and divide the indicator value into two intervals, of which: Interval 1 is [B2-2×Std2, B2], and Interval 2 is (B2, B2＋2×Std2).

(2) If the indicator value ≤B2-2×Std2, the score is 20.

(3) If the indicator value falls into Interval 1, the score is 60-(B2-X1) / (2×Std2)× 40 (X1 stands for all indicator values that fall into the Interval 1).

(4) If the indicator value = B2, the score is 60.

(5) If the indicator value falls into Interval 2, the score is 60＋(X2-B2) / (2×Std2)×40 (X2 stands for all indicator values that fall into Interval 2).

(6) If the indicator value ≥B2＋2×Std2, the score is 100.

The computing method may be illustrated as follows:

6. Each indicator is scored by the weighted average method and the scores for all indicators are added up to get the total score of quantitative indicators.

7. Computing method of the scores for special quantitative indicator values.

(1) If a participating banking depository financial institution does not carry out the green credit business as a result of limited business scope, the original scores based on both vertical and horizontal benchmarks shall be 20; and if a banking depository financial institution does not carry out the green credit business not as a result of limited business scope, the original scores based on both vertical and horizontal benchmarks shall be zero.

(2) If a participating banking depository financial institution commences the green credit business within the evaluation period, the original score based on the vertical benchmark shall be 60; and for a participating banking depository financial institution of which the green finance business is not newly operated and the green credit statistical data for the last consecutive three periods is unavailable, its vertical benchmark shall use the data for the last two periods or the previous period.

(3) The computing method for indicators under special circumstances shall be separately determined by the PBC.

Annex 2:

Qualitative Indicator System, Instructions and Scoring Method for Green Credit Performance Evaluation

Indicator category (weight)	Indicator content	Full score	Scoring rules
Evaluation by regulators (100%)	Implementation of the state’s green development policies	40	The research department of the PBC shall take comprehensive account of the routine business operations of the banking depository financial institution before assessing and scoring its green credit performance.
	Implementation of the Special Statistical System for Green Loans	30	The investigation and statistics department of the PBC shall take comprehensive account of the implementation by the banking depository financial institution before scoring its performance, and submit the score to the PBC’s research department.
	Implementation of the Self-Evaluation on Green Credit Performance	30	During the evaluations for the second, third, and fourth quarters of the current year and the first quarter of the next year, the scores shall be given based on the results of the self-evaluation on the current year’s green credit performance  organized by the China Banking and Insurance Regulatory Commission and in conjunction with the  current quarter’s major issues concerning the green credit business of the banking depository financial institution.