Green Banking in India Accelerates – ICICI funding Cleantech R&D,Canara Bank Solar Lighting and SBI using Wind Energy

Green Banking in India has started increasing at a rapid pace as concerns over Global Warming increase.Most of India’s Banks are pushing for Clean Technology in their separate ways.Though there is lack of regulation on funding of environment friendly projects,Banks are pushing ahead on their own anyway.India’s Financial Sector has seen the writing on the wall as the largest bank SBI is using Wind Energy for captive consumption to reduce its carbon footprint.The Bank is also reducing the interest rates for Green Projects beside helping in carbon consulting of customers.SBI is also implementing thousands of Green Kiosks to reduce the need for paper.ICICI Bank is helping funding research in clean technology using TFD while Canara Bank has funded almost 50,000 units of Solar Lighting .

Most of Green Banking is in providing loan at concessional interest rates to customers though its a difficult job given the conservative nature of banking and the newness of the Green Industry.Finance Companies in India have been facing a tough problem in lending to Solar Energy projects in India under the JNNSM.Their reluctance is due to the bankrupt condition of the state distribution electricity companies and the inexperience of solar power developers in India.However the Banks have in spite of all this introduced debt products with SBI extending a 15 year tenure project financing loan for a solar power project.Note Green Banking is essential if India wants to meet its target of 15% of Energy coming from Renewable Energy by 2020 from around 5% at present.

Banking on green projects

Recently, Naina Lal Kidwai, group general manager and country head, HSBC India, had sought regulations for banks on funding projects that may not be environmentally sustainable. Kidwai had expressed the need for certain uniform standards or guidelines to be adopted by the banks for funding projects that are not environmentally friendly.When asked if there are projects that the bank does not finance because of environmental concerns, she says, “Since there are no fixed standards, if I don’t lend, somebody else will. But we definitely seek an environmental audit or the road map of the company on clean technologies before we lend. In case the company does not have a clear strategy, we will not be comfortable lending.”

However, the scenario seems to be changing swiftly since the Indian economy has seen the emergence of green banking.Thanks to the increased awareness about global warming, banks are now putting their acts together, taking into consideration the environmental concerns more seriously than before.