Reserve Bank of India to unveil guidelines on green financing

The Reserve Bank of India is set to unveil guidelines on green financing, including special deposits for green projects as the central bank recognises that the subject of climate risk and sustainable finance no longer remains an outlier but needs a coordinated policy attention.

Governor Shaktikanta Das said these would be the first set of measures to address impacts of climate change on the financial system.

"Issuance of guidelines in this regard by he RBI indicates that the subject and the business of climate risk and sustainable finance is no longer a peripheral topic but has become mainstream," said Shivaji Thapliyal, head of research and lead analyst at Yes Securities.


The guidelines will be issued in a phased manner. RBI will also have a dedicated page on its website for all instructions, press releases, publications, speeches and related RBI communication on climate risk and sustainable finance.

RBI had brought out a discussion paper on climate risk and sustainable finance on July 27, 2022, for public comments and feedback. The proposed guidelines are based on analysis of the feedback received, RBI said.

Climate change is increasingly being recognised globally as a source of financial risk for banks. The uncertainty about the timing and severity of climate-related and environmental risk certainly threatens the safety, soundness and resilience of the financial intermediaries and, in turn, the stability of the overall financial system.

"Climate and sustainable financing is still an evolving area for all the stakeholders and proposals to issue guidelines for on various aspects, especially the disclosure framework on climate related risk, scenario analysis and stress testing may bring uniformity in disclosures by lenders," said Anil Gupta, senior vice president at ICRA. "This will hence enable relative benchmarking across various lenders," he said.