Growth of Sustainable (Green) Finance in Banking Sector of India: Case Study of Axis Bank and SBI

Abstract

Finance is key to building a sustainable future. Sustainable Finance is the process of taking due account of environmental, social and governance (ESG) considerations when making investment decisions in the financial sector, leading to increased longer-term investments into sustainable economic activities and projects. (1)Accordingly, many countries around the world have developed their own plans to increase investments in clean resources which can develop the economy and have high contributions to sustainability goals. The Sustainable Finance Group (SFG) in the Department of Regulation (DoR), Reserve Bank of India (RBI), carried out a survey in January 2022 to assess the status of sustainable finance in leading scheduled commercial banks.(2) The Objective of the study is to understand the concept and practice of sustainable finance in the banking sector of India, in this regard the Initiatives, Work done and Challenges faced by Axis Bank and SBI are studied. Published Annual Report on Sustainability has been used for understanding Sustainable Finance by these two banks. There is a need for RBI to lay out a strategy for banks to lend for more sustainable development goals. RBI Deputy Governor Rajeshwar Rao said that the government will raise funds through sovereign green bonds before March 31, 2023. The proceeds of these bonds will be deployed in public sector projects which will help in reducing the carbon intensity of Economy. (Times of India , 23rd Dec. 2022)