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Reserve Bank of India: Call for Inputs on “Discussion Paper on Climate Risk and Sustainable Finance”
Reserve Bank of India: Call for Inputs on “Discussion Paper on Climate Risk and Sustainable Finance”

July 28, 2022

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The Reserve Bank of India (RBI), pursuant to its statement on Developmental and Regulatory Policies, has released a discussion paper on “Climate Risk and Sustainable Finance(Discussion Paper) for stakeholder consultation. The Discussion Paper provides for strategy on climate change, climate related risks and its unique characteristics as applicable to RBI Regulated Entities (REs), guidance to REs to have appropriate governance, strategy to address climate change risks, and risk management structures. Key features of the Discussion Paper include:

  • REs to consider identifying credit, market, liquidity and operational risks arising from climate change and impacting their business activities.
  • REs may require incorporating climate related risks in their processors for other risks such as credit concentration risk, underwriting risk, reputational risk, strategic risk.
  • Board of Directors to assess risks arising from climate change and environmental degradation which may affect the REs. It suggests that the REs may have to constitute a committee at the Board level comprising experts from sustainability and risk domain to guide climate related policy, objective setting, monitoring targets and goals etc.
  • Material climate-related financial risks may be considered as part of RE’s business strategy and risk management framework.
  • REs may integrate climate-related risk indicators in their risk appetite framework. These shall consists of objective and measurable metrics.
  • REs may integrate a climate-risk assessment as part of their due diligence process. This climate risk assessment shall include physical and transitional risks the customer is exposed to but also how to may materialise into any reputational risks for the RE.

Survey on Climate Risk and Sustainable Finance

The RBI has also released results of a survey on “Climate Risk and Sustainable Finance”. 12 public sector banks, 16 private sector banks and 6 foreign banks had participated in the survey.

The survey was carried out to assess the approach, level of preparedness and progress made by leading scheduled commercial banks in managing climate risk. You can ask the survey here.  

If you have any inputs on the Discussion Paper, kindly write to apurva@nasscom.in by September 15, 2022.


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Apurva Singh
Senior Policy Associate

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