PSBs plan to set up 'green cells' for climate funding

State-run lenders will look to set up specialised 'green cells' with dedicated employees for climate-specific initiatives. These measures are part of the Enhanced Access and Service Excellence (EASE) reform version 7.0, which was rolled out last week.

A senior bank executive said that one of the major focus areas of PSBs in FY25 will be developing capabilities for raising green funds and increasing their green lending portfolios. "Banks will set up specialised cells that will also focus on physical and transition risk in the existing loan portfolio and new loan opportunities," he said, adding that other responsibilities include assessment of the environmental, social and governance (ESG)-related risks of borrowers through data.

According to a report by the Reserve Bank of India, the country's green financing requirement is estimated to be at least 2.5% of GDP annually until 2030. Earlier this year, the banking regulator came out with draft guidelines on the disclosure framework for climate-related financial risks in 2024. The draft also proposes a glide path for detailed disclosures by regulated entities (REs) in the areas of governance, strategy, risk management, and metrics and targets.

Bankers have been making demands for more incentives in order to promote green financing, including deposits. Earlier this year, State Bank of India chairman Dinesh Kumar Khara had said that they have approached the RBI seeking relaxation in the cash reserve ratio (CRR) requirement for green deposits. "We have put across the ask. One, of course, is a reduction in CRR for green deposits, and second, if at all as a policy, it can be incorporated into the regulatory policy mechanism," he had said.