Feb 8, 2023
India Set to Issue Rules on Climate Risk and Sustainable Finance
(Bloomberg) -- India’s central bank is putting regulations in place to push the nation’s lenders to take steps, including bolstering green lending, to mitigate risks emerging from climate change.
Rules in the offing include a framework for acceptance of green deposits, a framework on climate-related financial risks, analysis on various climate scenarios and stress tests, Shaktikanta Das, the governor of the Reserve Bank of India, said Wednesday. Funds raised through green deposits are meant to be invested in environment-friendly projects.
India has pledged to become a net zero greenhouse gas economy by 2070, and the regulator has been nudging banks to put in place initiatives to tackle climate-risk. The RBI had earlier suggested lenders mobilize capital to scale up green lending and make climate risk a part of their underwriting process.
The guidelines, that follows a discussion paper in July, will be issued in a phased manner, Das said. These “will ensure our financial system starts building in the forces of resilience to withstand any possibility of the emergence of vulnerability to climate change,” he said Wednesday.
India ranked 104th out of 192 countries in an index of climate readiness compiled by the Notre Dame Global Adaptation Initiative, which measures a country’s ability to leverage investments toward adapting to higher temperatures and extreme weather. In January, the South Asian nation sold its maiden sovereign green bonds.
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