“RBI’s new framework for Green Deposits effective from June 2023. Understand the meaning, actionable steps, and exclusions. Regulated entities include banks, NBFCs, and HFCs. Allocate deposits towards renewable energy, climate resilience, biodiversity, and more. Explore the comprehensive policy requirements and reporting mandates. Stay informed about excluded projects and mandatory impact assessments. Think green for a sustainable future. Source: RBI’s Framework for acceptance of Green Deposits.”
THINK GREEN. BANKING FOR THE PLANET
Meaning of Green Deposit
A deposit will acquire the green color when :
An interest-bearing deposit is received by regulated entities for a fixed period and the proceeds of which are earmarked for being allocated towards green finance.
Deposit can be
- Cumulative/Non-cumulative
- Renewed or withdrawn at the option of the Depositor
- Denominated in Indian Rupees only
- Tenor, size, rates, etc. as per the RBI-approved regulations
Regulated entities mean
~Banks
~ Deposit-taking NBFC’s
~HFC’s
Green finance means
The allocation of proceeds raised from green deposits shall be towards the following list of green activities/projects which encourage energy efficiency in resource utilization, reduce carbon emissions and greenhouse gases, promote climate resilience and/or adaptation, and value and improve natural ecosystems and biodiversity.
- Renewable energy
- Energy efficiency
- Clean transportation
- Climate change adaptation
- Sustainable Water and waste management
- Pollution, Prevention, and control
- Sustainable Management of living natural resources and land use
- Terrestrial and Aquatic Biodiversity Conservation
Exclusions:
- Projects involving new or existing extraction, production and distribution of fossil fuels, including improvements and upgrades; or where the core energy source is fossil-fuel based.
- Nuclear power generation.
- Direct waste incineration.
- Alcohol, weapons, tobacco, gaming, or palm oil industries.
- Renewable energy projects generate energy from biomass using feedstock originating from protected areas.
- Landfill projects.
- Hydropower plants larger than 25 MW.
ACTIONABLES UNDER THE SAID FRAMEWORK
- A comprehensive Board approved policy should be placed on the website wherein acceptance and allocation of deposits aspects shall be detailed.
- The Financing Framework Policy shall be framed and put on the website detailing:
- The utilization of the proceeds in the identified green activities.
- Allocation of the proceeds and reporting
- The manner of project evaluation, the selection criteria
- Third-Party Verification of the allocation and utilization of the funds
- Impact assessment ( which is optional for FY 2023-2024 but mandatory from FY 2024-2025
- Third-Party Verification and Impact Assessment Report to be placed on the website
- A detailed analysis of the Green Project shall be placed within three months from the close of the financial year before the Board of Directors which shall be suitably disclosed in the Annual Report as per the proforma.
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