Reserve Bank announces framework for acceptance of Green Deposits

With a view to foster and develop a green finance eco-system in India, the Reserve Bank has put in place a framework for acceptance of Green Deposits.

 

In a statement, RBI has said that the financial sector can play a pivotal role in mobilizing and allocating resources for green activities/projects. As per the framework, entities regulated by RBI can accept green deposits from customers and the proceeds shall be allocated for projects undertaken in sectors like renewable energy, energy efficiency, promoting climate resilience, and improvement of natural ecosystems and biodiversity.

 

All deposit-taking banks will also be required



to put in place a comprehensive Board-approved policy, detailing aspects of the issuance and allocation of green deposits. The boards will also have to put in place a financing framework for effective allocation of green deposits. The same will be subject to an independent third-party verification which will have to be conducted annually.

 

RBI has said that banks can decide on the tenor, size, and interest rate as per norms. On maturity, customers will have the option of renewing or withdrawing the green deposits. RBI has clarified that the green deposits shall be accepted in Indian Rupees only.