Sustainable Financing

One of the key elements of the Bank's ESG policy is its commitment to follow responsible lending practices and fostering a positive impact on the environment and society to meet United Nation’s Sustainable Development Goals (UN SDGs).

Aligned with the Bank's strategy, a Framework for Sustainable Financing has been formulated to provide guidance on green, social, sustainable, and sustainable-linked lending, outlining the methodology and associated procedures. 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 mentioned in the RBI’s guidelines on Framework for acceptance of Green deposits issued in April 2023. The Bank classifies proposals into (i) dedicated sustainable lending; and (ii) sustainability linked lending, based on the underlying characteristics of the transaction. The framework specifies the eligibility criteria, applicable due diligence requirements, and the verification process for sustainable finance.

The Bank is in the process of integrating the characteristics of the framework into enterprise-wide credit sanction and loan management systems.

At March 31, 2024, the outstanding portfolio to sectors like renewable energy, electric vehicles, green certified real estate, waste management, water sanitation or supply, and lending to weaker section under RBI’s priority sector norms was ₹ 685.28 billion. Of this, the green financing portfolio (in accordance with the Bank's Framework for Sustainable Financing) accounted for 28.3%, which is approximately ₹ 193.66 billion.

Renewable energy financing includes exposures to power generation primarily through sources such as solar, wind and hybrid across the country and plants being set up for conversion of waste to energy. The financing currently supports creation of capacity of about 1.64 GW. The Bank encourages adoption of electric vehicles (e-vehicles) through financing of two-wheelers and four-wheelers as well as through lending to manufacturers for production of e-vehicles and/or adoption of new technologies. The Bank has also financed green buildings, primarily used for commercial/industrial purposes. To be eligible as green, such buildings are required to be certified as per acceptable standards such as IGBC, LEED, and GREEAM.

Suppliers Code of Conduct & Green Procurement Framework

To strengthen engagement of the Bank’s Infrastructure Management and Services Group (IMSG) with its vendors on ESG and sustainability, a Suppliers' Code of Conduct (Suppliers Code) has been developed. The Suppliers Code encourages vendors to adopt sustainable practices like efficient use of energy and water, waste management, and embed good practices like occupational health and safety, human rights and others in their operations.

In addition to creating awareness within IMSG and training the relevant team members, the Bank engaged with the vendors of IMSG during fiscal 2023 to familiarise them with the Bank's approach on adoption of sustainable practices and to communicate the Bank’s intent to evaluate them on environmental and social factors.

The IMSG has also established a Green Procurement Framework that articulates the Bank’s focus on minimising its environmental footprint and aims to purchase products that are sustainable and environment-friendly.