New Delhi: The bank has always been the backbone of Indian economic growth and as a state guideline for sustainable growth, the banking sector must accelerate green loans, said Chairman of SBI Dinesh Khara on Thursday.
He added that there was a growing need for sensitive Indian financial sectors with the importance and benefits of green finance.
“Formal Definition of Green Finance in India will allow more appropriate financial tracking to flow to the green sectors, which in turn will help design effective policy regulations and institutional mechanisms directed at increasing public and private investment in the green sectors,” said Khara.
India’s green financial definition can be formed through a combination of adopting international practices, developing a series of principles for green economic activities and obtaining stakeholder views, he suggests.
Speaking at the Indian ESG leadership award, Khara said, “Unless the bank can provide adequate credit for green projects and measure risks in their portfolios, depositors and bank shareholders will continue to bring the risk of ESG (environment, social and governance) Can erode again.
“To support the acceleration and green financing, he said, a number of structural changes will be needed in a traditional loan approach, including the evaluation and certification of green credentials from each project and a road map understanding to reach net zero.
Speaking of the SBI ESG initiative, he said the bank aims to become a neutral carbon in 2030 and to achieve the goals of a number of steps taken to reduce the impact of the carbon.
This is not limited to the installation of solar power plants but tree plantations, organic farming and ban the use of single plastic use on campus are a few other steps, he added.
With regard to the operation, he said the bank is also in the process of identifying climate risk that has the potential to produce substantive changes in the business.
“The bank recognizes the increasing risk of climate change embedded in its credit portfolio and has initiated the process of designing a framework for climate risk management in this regard,” he said.
Policies have been placed to increase bank exposure to climate change and banks have expanded credit facilities to borrowers in the renewable energy sector with easier provisions, he added.
He also said that for loans exceeded Rs 50 Crore, the borrower was assigned a score based on their performance on various ESG parameters.
Over the years, he said, SBI has designed products and services to provide incentives and facilitate transition to environmentally friendly technology.
Green Bonds and Green Loan Bonds worth $ 800 billion have been issued since 2018-19 while green loans worth 50 million euros are raised in 2021.
The results are used in accordance with the bank’s green bond framework to present a positive environmental impact encouragement to be updated.
energy, he added.
Esgrisk.ai, an ESG rating agent from Acuite Group, announced 21 winners from 500 registered companies in 55 industries.