There’s Need to Mobilise Green Finance to Fund Projects: SBI

New Delhi, 18th June 2023: On June 17, State Bank of India (SBI) Chairman Dinesh Khara stated that there is a need to mobilise domestic and international flows from retail and institutional investors to meet the needs of green finance.

Khara also emphasised the importance of robust climate-focused frameworks supported by government legislation at a session on ‘Climate Finance and Risk’ in New Delhi.

Khara said, “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.”

According to the most recent statistics from the RBI’s sectoral deployment for April 2023, bank credit to renewable energy projects, a subset of the larger green finance segment, increased by 28% to Rs 4,614 crore in March 2023 from Rs 3,607 crore in March 2022.

This follows a 94% increase in credit to this industry between March 2021 and March 2022, with bank credit increasing to Rs 3,607 crore from Rs 1,853 crore.

Aside from that, banks and non-banking financial corporations (NBFCs) are looking for increased government or central bank promotion of green finance programmes, as well as subsidy support for green projects, according to industry experts.

Aside from funding in the form of green deposits, financial institutions believe there is a lack of incentive for them to invest more in green initiatives, according to experts.

In a speech at an event in December 2022, RBI Deputy Governor M Rajeshwar Rao stated that the government announced in the Union Budget for 2022-23 that climate action would be a key priority and proposed that as part of its overall market borrowings in 2022-23, sovereign green bonds (SGBs) will be issued to mobilise resources for green infrastructure.

Rao had said, “The proceeds will be deployed in public sector projects which will help in reducing the carbon intensity of the economy.”