“Climate change is a task for the global economy, society and its institutions,” said Mr Rao of RBI.
New Delhi: RBI Deputy Governor M Rajeswara Rao on Monday stressed the need to mainstream green finance and look at ways to incorporate environmental impact into commercial credit decisions. He said that it is important to balance the needs of credit expansion, economic growth and social development simultaneously. Green finance can be clearly defined as the financing of investments that provide environmental benefits in the broader context of environmentally sustainable development.
Addressing the CAFRAL Virtual Conference on Green and Sustainable Finance, Mr. Rao said, “Climate risks can impact the financial sector through two broad channels; first – physical risk which means economic costs and financial losses that result from extreme weather. as a result of the increasing severity and frequency of events and long-term climate change and other infection risks that arise as we try to adjust to a low-carbon economy.”
He said the fight against climate change is certainly a task for the global economy, society and its institutions – including central banks.
Commenting on sustainable finance and the role of RBI in a dynamic world, he said, “The mission statement of the Reserve Bank of India (Utkarsh 2022) includes universal access to financial services and a strong, dynamic and responsive financial intermediation infrastructure and proactive Recognizes the importance of and receptive financial intermediation. Since the economy and financial system are not stable, we need to respond appropriately to the changes around us. To provide us with monetary and financial stability in a timely manner. New and emerging risks and opportunities also need to be actively considered.”
He said that in 2007 itself, the Reserve Bank had advised banks to prepare a suitable action plan to make a meaningful contribution to sustainable development. In 2012, the RBI included loans sanctioned directly by banks to individuals for setting up off-grid solar and other off-grid renewable energy solutions for homes and, in 2015, the PSL (priority sector lending) norm, bank loans to an extent was extended to. 15 crores to borrowers for other purposes like solar based power generators, biomass based power generators, wind mills, etc. In 2020, the above limit for bank loans was doubled to Rs 30 crore.”
The Deputy Governor of the Reserve Bank also noted that a global understanding of the systemic impact of climate change on the economy and financial system, as well as its consequent impact on financial stability, is developing and, accordingly, the needs of central banks and observers around the world. There have also been reactions. was developing.
Mr Rao further said that “the private and public sector needs to build on the early progress”.
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