Standard Chartered Bank is seeking partners to introduce green lending to small businesses in India, following a similar pilot project in Singapore. The bank’s global head of SME banking, Xie Wen, stated that the lender has green deposits and structured products, and is considering launching green financing products. However, this requires a partner to help track the usage of such green loans and their carbon footprint. Wen emphasized that tracking the purpose of each loan and the carbon footprint is crucial for environmental, social, and governance (ESG) considerations.
The bank has already started exploring potential partners in India to provide data on the carbon footprint of small businesses, which is not readily available. Green lending refers to financial products that support eco-friendly projects, while transition finance refers to financial services that help borrowers align their business and operations with international climate change objectives.
Globally, Standard Chartered Bank has total green assets of $17.39 billion, primarily in themes such as clean transportation, energy efficiency, and renewable energy. In India, the bank is focusing on growing its SME business, with around 27,000 SME customers currently. Wen stated that India is among the top three markets for small businesses, along with Hong Kong and Singapore.
The bank is also committed to increasing ESG awareness among smaller clients in India. To achieve this, it has introduced a simplified questionnaire for onboarding SME clients, which aims to educate them about ESG requirements. The Indian government has also introduced the MSME Green Investment Financing for Transformation (MSE-GIFT) scheme to provide discounted finance to small businesses adopting green technologies.
The importance of green lending and ESG considerations cannot be overstated, given the significant contribution of small businesses to India’s economy. With 59.3 million registered MSMEs providing employment to over 250 million people, the sector accounts for a substantial portion of the country’s exports. As the bank continues to explore green lending opportunities in India, it is likely to play a critical role in supporting the country’s transition to a more sustainable and environmentally-friendly economy.