RBI gears up on green drive with plans to create data repository for climate change risks

The RBI MPC has maintained the status quo on repo rates during the October policy meeting, opting to hold steady despite the US Federal Reserve's recent rate cut of 50 basis points.

The Reserve Bank of India (RBI) plans to create a data repository for risks related to climate change, Governor Shaktikanta Das said in his monetary policy address on October 9.

“Climate change is emerging as a significant risk to the financial system world over. This makes it necessary for regulated entities to undertake robust climate risk assessment, which is sometimes hindered by gaps in high-quality climate-related data. To bridge these data gaps, the Reserve Bank proposes to create a data repository, the Reserve Bank – Climate Risk Information System (RB-CRIS),” Das said.

Green push

In April 2023, the RBI announced the framework for acceptance of “green deposits” of regulated entities. The idea was to foster and develop a green financial ecosystem in the country, it said.

Under the framework, regulated entities can offer green deposits to customers, protect interest of the depositors, aid customers to achieve their sustainability agenda, address greenwashing concerns and help augment the flow of credit to green activities/projects, it said.

In June 2024, RBI deputy governor Michael Patra said that the central bank is weighing a coverage for green deposits. "We are exploring appropriate coverage for green deposits, climate-risk based differential premiums and ex ante funding needs for climate sustainability," he said at the 79th Executive Committee Meeting of the International Association of Deposit Insures (IADI) at Rome, Italy, on June 14.

The RBI Monetary Policy Committee (MPC) in its October review of the policy maintained status quo on repo rate keeping it at 6.5 percent, despite the US Federal Reserve recently lowering the rate cut by 50 basis points. The RBI, however, this time changed its stance to 'neutral' from 'withdrawal of accommodation'.