Margin reduction incentive

2011 saw continued good results in our pilot project on our margin reduction incentive, whereby we offer a reduced interest rate to borrowers who meet ESG standards within a set timeframe. In some cases the reduction initiative came into effect. In Sri Lanka, we closed an innovative transaction with commercial leasing company CLC, which leases tuk-tuks. Knowing that emissions are substantially lowered if the vehicles are checked and maintained annually, we incorporated into the loan a feature that a third party will conduct such checks and the company will implement the necessary maintenance. If they do this, they will receive a reduction in the interest rate we charge them. This was the first time we have implemented this mechanism with a non-banking institution.