FUTURE OF GREEN FINANCING IN INDIA

Welingkar Institute Of Management

Green Finance comprises the financing of public and private green investments and public policies. It contains the components of the financial system that deal specifically with green investments India has set the target of cutting down its emissions to net zero by 2070 and increasing its non-fossil fuel energy capacity to 500GW Along with this, India also needs to focus on improving the growth of green finance. Climate Policy Initiative in its report titled ‘Landscape of Green Finance in India’, claims that the tracked Green Finance in 2019-20 was Rs. 3,09,000cr Per annum.

Green Finance comprises the financing of public and private green investments and public policies. It contains the components of the financial system that deal specifically with green investments India has set the target of cutting down its emissions to net zero by 2070 and increasing its non-fossil fuel energy capacity to 500GW Along with this, India also needs to focus on improving the growth of green finance. Climate Policy Initiative in its report titled ‘Landscape of Green Finance in India’, claims that the tracked Green Finance in 201920 was Rs. 3,09,000cr Per annum.

Green Banking:

Green Climate Fund:

A green fund can be a tool that can unlock financing and scale up clean energy growth in the market. A green fund reinvests the income and hence makes an effort to recycle the funds which can create a significant impact compared to how government securities would have impacted A green fund investment is a supportive hand to the banking sector by their innovative interventions in the financial world.

Green Banks consider all the environmental factors having a target of protecting the environment and conservation of natural resources Green Banks can lend Green Loans to businesses considered as environmentally sustainable and thereby promote sustainability in the economy Green banks in India are still at a very premature stage and need support to function. Green Banking can be promoted with the help of some pro government policies Government can help in reducing the lending rates in case of green loans in order to increase the sustainability in the economy Creating awareness among the customers is also key to encourage green banking

Green Finance Index:

Attractive green finance indices can identify and combine companies which have a good performance towards environmental sustainability A benchmark can be created for companies in general as well as for the financial condition of the low carbon companies. The conventional indices can rate the companies according to their performance towards being sustainable India can create an independent think tank which will be tasked with specialized research in the field of green financing This can help in promoting design thinking and developing some innovative mechanisms and help India in becoming one of the world’s leading financial think tanks in the field of green financing

Promoting ESG investments and Partial Credit Enhancement Schemes:

ESG investments should be promoted through some positive government policies Partial risk guarantee schemes can help to improve the current credit profile of a financial transaction. Credit enhancement schemes can aid the banking system and can be extended towards the green financing model.

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles Scheme:

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles Scheme launched in 2015 is a great opportunity for banks and financial institutions to help India in increasing the penetration of Electric Vehicles. The high initial cost of the vehicles obstruct the offtake and hence the adoption of Electric Vehicles is still not very high. Green Loans can be initiated by several banks as a contribution towards a low carbon economy The time period for these loans can be increased to further ease the burden of repayment and hence increase the adoption of Electric Vehicles in the country

India is working very hard to meet its climate goals and at the same time greening its finance has also been an imperative task For this, a collective vision of policymakers and concentrated efforts in the financial system is the key. Public awareness and improving the options of financing are important in order to increase growth in the green finance sector Green infrastructure development also needs to be a key area of focus in order to increase sustainability in the financial sector Funds would be required for conducting new research regarding green technology. Green Finance is a critical means to facilitate a shift towards sustainable economic growth This can be the destiny of sustainable banking as well.