In order to sensitise banks and different monetary establishments to the dangers of local weather change, the central financial institution goes to subject a consultative paper. The paper will familiarise banks with worldwide practices and allow adoption of a strategic method to climate-related dangers.
“The physical and transition risks either individually or together may be high for India under the ‘current policies’ scenario. A successful implementation of emission reduction for India carries inflationary risks, which will need to be managed through carefully crafted transition plans,” the central financial institution stated in its annual report for 2021-22.
In January 2022, the RBI-mandated Sustainable Finance Group (SFG) did a survey with PSU banks, personal and overseas banks. The central financial institution will embody the suggestions within the paper on local weather change danger.
The SFG coordinates with different nationwide and worldwide companies on points regarding local weather change. The group will recommend methods and research evolving a regulatory framework to mitigate local weather associated dangers within the Indian context, which could be adopted by banks and different monetary establishments.
If India sticks to its aim of world coordination to regulate temperature rise, it would scale back greenhouse gases and power consumption. However, it would additionally doubtless trigger a major rise in commodity and carbon costs which may feed into inflation following greater enter prices, the central financial institution stated.
Separately, the federal government intends to subject sovereign inexperienced bonds to facilitate local weather change transition.
In the Union Budget for 2022-23, the federal government had introduced plans to subject sovereign inexperienced bonds within the home market as part of its general market borrowing programme.
Source: www.financialexpress.com”