RBI issues framework for acceptance of green deposits by Regulated Entities
The Reserve Bank of India (RBI) has announced the framework for the acceptance of green deposits of regulated entities (RE).
The framework will come into effect from June 1, 2023.
As per the guidelines of RBI, a Green Deposit means:
An interest-bearing deposit, received by the RE for a fixed period and the proceeds of which are earmarked for being allocated towards green finance.
Lending to and investing in the activities or projects that contribute to climate risk mitigation, climate adaptation and resilience, and other climate-related or environmental objectives – including biodiversity management and nature-based solutions.
The green deposits will be denominated in Indian rupees only.
The Regulated entities (REs) will have to allocate proceeds raised from green deposits towards the green activities or projects.
These instructions are applicable for all scheduled commercial banks, including small finance banks. However regional rural banks, local area banks and payments banks are excluded.
The framework will also apply on all deposit-taking non-banking financial companies (NBFCs) registered with the RBI, including housing finance companies.
The aim of Green Deposit framework:
To encourage regulated entities (REs) to offer green deposits to customers to foster and develop a green finance ecosystem in the country.
To protect the interest of the depositors, aid customers to achieve their sustainability agenda, address greenwashing concerns and help augment the flow of credit to green activities or projects.
