The Reserve Bank on Wednesday suggested that banks and other financial institutions could consider eliminating the use of paper at their branches as well as introduce e-receipts at ATMs.
In a discussion paper on ‘Climate Risk and Sustainable Finance’, the Reserve Bank of India (RBI) said it intends to prepare a strategy based on the global best practices on mitigating the adverse impacts of climate change, learnings from participation in standard-setting bodies and other international fora.
The thrust of the strategy would include a broad guidance for all RBI Regulated Entities (REs) to have appropriate governance; strategy to address climate change risks and risk management structure to effectively manage them from a micro-prudential perspective, it said.
Further, the central bank has proposed climate risk-related financial disclosure and reporting for REs, capacity building, and voluntary initiatives.
On a voluntary basis, the REs should set up targets for increasing funding to green projects over short, medium and longer term towards certain identified sectors.
“In order to green the banking processes by making them more environment-friendly, REs could consider converting their branches to green branches by eliminating the use of paper in their operations, introducing option of e-receipts at their ATMs,” the discussion paper said.
RBI has invited comments on the discussion paper till September 30.
According to the discussion paper, the REs may look at ways and means to incentivise adoption of e-receipts.
Also, the REs may like to convert all their data centres to green data centres by switching over to renewable energy for sourcing power for the data centres and implement guidance provided by established frameworks like the Green Data Centre Rating Systems, it noted.
In the discussion paper, RBI also said that there is a growing need to sensitise India’s financial sector to the importance and benefits of green finance with special emphasis on capacity building and creating awareness of climate risk and sustainable finance to tackle the challenges posed by climate change.
To address the capacity building requirements, the discussion paper also suggested that the Indian Banks’ Association (IBA) may set up a working group on capacity building in the area of climate risk and sustainable finance.
The board of directors of the REs would have to play a critical role in identifying climate-related and environmental risks as well as opportunities and assessing the actual and potential impact of these risks on their strategies and plans, it added.
Source: The Economic Times