(Reuters) – Indian banks and non-bank finance companies (NBFCs) should consider setting up a common pool of bankable projects for climate-related financing, the country’s central bank chief Sanjay Malhotra said on Thursday.
Speaking at a Reserve Bank Of India (RBI) event in Delhi, Malhotra said one of the major constraints in having sufficient climate-related financing is the lack of projects with a high probability of repayment.
“Creation of a common pool of such bankable projects will have multi-fold benefits for the entire ecosystem. Regulated entities with experience of such projects can contribute to the pool for the benefit of others,” he said.
The RBI has previously recognised climate change as a source of financial concern and, as part of its efforts to address this, released a draft standard disclosure framework last year on climate-related financial risks for regulated entities.
In July 2022, the RBI also released a discussion paper on strategies to address climate-related financial risks, and in 2023, it estimated India will spend about 85.6 trillion rupees ($1.05 trillion) by 2030 to adapt industries to climate norms.
“The impact of climate change risks is not limited to the financial system alone but extends to the real economy,” Malhotra said on Thursday.
(Reporting by Sethuraman NR; Editing by Vijay Kishore)
