Sustainable Financing

During fiscal 2023, the Bank made further efforts to embed sustainable financing in its business strategy. An internal Framework for Sustainable Financing (Framework), aimed at providing guidance on Green/Social (Sustainable) Sustainability-linked lending was developed.

The Framework outlines the methodology and associated procedures to be uniformly applied to classify financial products and services offered by the Bank as sustainable finance. The Bank has taken inputs from the Government of India’s Framework for Sovereign Green Bonds issued in December 2022 and which has also been referred to in the RBI’s guidelines on Framework for acceptance of Green deposits issued in April 2023. The Bank’s Framework specifies the eligibility criteria, the applicable due diligence requirements and the verification process for sustainable finance. The Framework also aims to establish a consistent and comprehensive methodology for the classification and reporting of the Bank’s credit facilities as sustainable. Certain areas of lending are excluded from the purview of the Framework.

At March 31, 2023, as per information available internally and collated by the Bank, outstanding portfolio to sectors like renewable energy, electric vehicles, green certified real estate, waste management, water sanitation, positive impact sectors including small-scale khadi, handicrafts and lending to weaker section under RBI’s priority sector norms was ₹556 billion in fiscal 2023. Of this, the green financing portfolio (in accordance with the Bank's Framework for Sustainable Financing) accounted for 21.4%, which is approximately ₹119 billion. The Bank had also subscribed to India’s first issue of Sovereign Green Bonds in fiscal 2023.

The Bank is cognisant of transition from fossil fuel-based energy to renewable sources, and will support businesses in this transition based on selection of counterparty and appropriate risk-return in accordance with the Enterprise Risk Management framework. The Bank will constantly review the areas of lending/investment that become eligible as Green/Social (Sustainable) Sustainability-linked, as the taxonomy for India develops.