RBI establishes framework for banks to accept green deposits

RBI has established a framework for financial institutions to provide customers with green deposits. The framework intends to promote the development of the country’s green finance ecosystem, and applies to all regulated institutions, including scheduled commercial banks and deposit-taking non-banking financial companies. The framework will take effect on June 1, 2023 and revenues from green deposits will be allocated in accordance with the official Indian green taxonomy, which is still under finalisation. As an interim solution, banks will be compelled to use earnings from green deposits to fund renewable energy projects such as solar, wind, biomass and hydropower projects that combine energy generation and storage.