Here is a summary of the article in 400 words:
India has taken a proactive approach to financing renewable energy projects by including them under priority sector lending, aimed at speeding up the country’s transition to a low-carbon economy. Reserve Bank of India (RBI) Governor Sanjay Malhotra emphasized the importance of central banks in emerging markets and developing economies in channeling credit to specific sectors, taking into account national circumstances and developmental objectives.
Malhotra highlighted the RBI’s commitment to addressing and mitigating climate change risks to the financial system, focusing on supporting capacity building and fostering a conducive regulatory framework for green and sustainable finance. He emphasized the need for regulated entities to develop expertise in assessing risks associated with financing projects that use new and emerging green technologies.
The RBI has created the Reserve Bank – Climate Risk Information System (RB-CRIS) to bridge data gaps and provide standardized datasets for physical and transition risk assessment. The system is expected to launch later this year. Malhotra also announced the establishment of a dedicated cohort on climate change risks and sustainable finance under the RBI’s Regulatory Sandbox initiative and a special “Greenathon” focused on climate change and related challenges.
The RBI Governor underscored the critical role of technology and finance in the transition to a low-carbon economy, highlighting the need for innovative solutions. He noted that the RBI has been promoting innovation through initiatives such as the Regulatory Sandbox and Hackathon.
Malhotra also mentioned that several jurisdictions are currently assessing and disclosing climate-related risks, with international organizations like the International Sustainability Standards Board (ISSB) and the Basel Committee on Banking Supervision (BCBS) introducing climate-related disclosure standards. The RBI has issued draft guidelines on the Disclosure Framework for Climate-Related Financial Risks and is developing a guidance note on Climate Scenario Analysis and Stress Testing for regulated entities.
Overall, the RBI’s efforts aim to provide a framework for regulated entities to assess and manage climate-related financial risks, ultimately supporting the country’s transition to a low-carbon economy.