State Bank of India (SBI) Chairman Dinesh Khara on June 17 said that there is a need to mobilise domestic and international flows from retail as well as institutional investors to meet the green finance needs.
Khara, at an event hosted on 'Climate Finance and Risk’ in New Delhi, also stressed on the need for robust climate focused frameworks backed by central regulations.
"There is a need to mobilise domestic and international flows from retail as well as institutional investors to meet the green finance needs; and robust climate focused frameworks backed by central regulations," said Khara.
Bank credit
The latest data from RBI’s sectoral deployment for April 2023 showed that bank credit to renewable energy projects, a part of the larger green finance segment, jumped 28 percent to Rs 4,614 crore in March 2023 from Rs 3,607 crore in March 2022.
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This comes after credit to this sector rose 94 percent between March 2021 and March 2022, with bank credit growing to Rs 3,607 crore from Rs 1,853 crore.
Other than this, banks and non-banking financial companies (NBFCs) are looking for greater promotion of green finance schemes and subsidy support for green projects from the government or central bank, said industry experts.
There is a need for awareness towards green financing since there are opportunities for financial institutions in this sector as the market is largely untapped, they said.
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Apart from funds in the form of green deposits, financial institutions feel that there is a lack of incentive for them and subsidies can help them invest more in green projects, experts said.
RBI Deputy Governor M Rajeshwar Rao in a speech at an event in December 2022 said that the government in the Union Budget for 2022-23 announced that climate action would be a key priority and proposed that as a part of its overall market borrowings in 2022-23, sovereign green bonds (SGBs) will be issued for mobilising resources for green infrastructure.
“The proceeds will be deployed in public sector projects which will help in reducing the carbon intensity of the economy,” said Rao.
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