Sustainable Banking: The Tech-Driven to Green Finance 


Many technological advancements and innovations have transformed various aspects of the environment, industries, and businesses. The shift from manual to digital processes is a significant part of this transformation. However, it’s essential to remember the importance of protecting the environment and world for the benefit of future generations. 

The need for environmental sustainability, especially in the financial sector, is coming up with innovative solutions. Sustainable banking focuses on environmental and social responsibility. It is the driving force in the global economy and one of the essential aspects of sustainable banking green financing. In recent years, sustainable banking has witnessed significant changes to streamline processes and enhancement of green financing.

In this article, we will delve into the importance of sustainable banking and explore how banking and financial institutions are reshaping by this initiative. 

A Comprehensive View of Green Finance 

Green financing is also known as sustainable financing. It has gained significant attention in the banking sector over the past few years. Green financing emerged as a response to the essential need for environmental sustainability and the mitigation of climate change. 

The Necessity of Green Financing 

The major need or importance for green financing came from the need to improve and sustain the environmental and social impacts of traditional financing activities. The rise of issues such as pollution and resources management are the growing demand for banking and financial institutions to support and encourage sustainable and environmentally friendly initiatives. 

Objectives of Green Financing in Banking

Risk Mitigation 

Green financing also helps mitigate the risks associated with environmental and social issues. By integrating environmental and social considerations into lending and investment decisions, banks can potentially reduce their exposure to risks related to regulatory changes, reputational damage, and endangered resources. 

Regulatory Compliance 

Green financing and banking seek to adhere to international environmental standards and regulations. Additionally, it supports the development of frameworks for sustainable finance at the national and international levels. 

Sustainable Development 

This aim is to contribute to sustainable development by financing projects that align with environmental, social, and governance (ESG) criteria, promoting economic growth. This minimizes negative environmental impacts. 

Social Responsibility 

Financial institutions engaged in green financing seek to fulfil their corporate social responsibility by supporting projects with positive social and environmental impacts, such as clean water access, affordable housing, and sustainable agriculture. 

How Does India Possess Sustainable Banking and Green Finance?

Sustainable banking in India involves a positive approach to green financing that promotes environmental conservation and sustainability through innovative financial solutions and technology integration.  

The banking industry in India plays a vital role in the country’s socio-economic progress and development, especially as India targets achieving net-zero emissions by 2070. The initiatives undertaken by the Indian banking industry pose a strong commitment to sustainability and ESG-linked financing for environmental conservation. 

The Indian banking sector aims to leverage technology for sustainable banking initiatives. It involves utilizing digital platforms for online banking and card-based transactions and adopting innovative technologies to support green finance. 

Initiatives Taken by Top Banks for Green Finance 

Sustainable Finance Schemes 

Institutions like the Small Industries Development Bank of India (SIDBI) have introduced schemes to fund projects contributing to energy efficiency and cleaner production, such as solar power plants and wind energy generators. 

Green Infrastructure Projects 

Banks have invested in green infrastructure projects, such as solar-powered uninterrupted power supply, LED bulbs, and solar-powered ATMs, demonstrating a commitment to sustainable technologies. 

Real-Life Example: Sikkim implements solar-powered ATMs  

Green Car Loan 

This bank has launched a Green Car Loan in 2022, this initiative was to promote the adoption of electric vehicles (EVs). This initiative aims to provide attractive financing options for purchasing electric cars to encourage the shift towards environmentally friendly and sustainable transportation. 

Green Bonds 

Financial institutions in India are encouraged to develop a roadmap for sustainability transformation, starting with the issuance of green bonds and offering green lending products. This involves various stages, including current state assessment, target setting, alignment with stakeholders, planning and implementation, and monitoring and reporting.  

Impact of Banks and Financial Institutions on Green Finance 

The long-term perspective involves creating an environmentally friendly economy for financial institutions and industries, aligning with global sustainability best practices. 

Online Banking 

Banks are offering a range of online services such as internet, mobile, and phone banking, as well as online transactions like bill payments, deposits, and fund transfers. These measures help reduce the amount of paper, energy consumption, and overall resource expenditure. 

For example, customers can now pay their bills and manage their accounts without paper statements or visiting physical bank branches, which saves time and resources. 

Green Finance 

Banks support environment-friendly projects and products, such as financing solar equipment and vehicles with low carbon emissions. They may offer concessions on processing fees and reasonable interest rates for these initiatives. 

Green Infrastructure 

Banks are investing in green infrastructure, including environmentally friendly IT facilities, and energy generation and waste recycling plants. This helps minimize the carbon footprint of the bank’s internal operations. For example, Banks are implementing self-service kiosks, cash deposit machines, and eco-friendly office spaces to reduce their environmental impact. 

The Helping Hand of New Technologies in Green Finance 

Big Data 

Big Data allows for measuring environmental impact and risk analysis for climate transition. It is a valuable resource for measuring the environmental impact of companies’ assets, including their supply chains, enabling a deeper understanding of risk scenarios related to climate transition and sustainable development goals.  

Artificial Intelligence (AI) 

AI is used to evaluate the impact of companies on sustainable development goals, aiding investors in making decisions that promote sustainability. Additionally, AI’s predictive capabilities can assist in addressing climate change by identifying environmental changes through satellite imagery and other data sources. 

India’s Recent Approach Towards Green Finance – Case Study 

Green Bonds Revolutionizing Sustainable Finance in India 

Green bonds are debt instruments, designated to fund environment-friendly and sustainable projects. They serve as a financing mechanism for projects with a positive environmental impact, including renewable energy, energy efficiency, and sustainable agriculture. 

Stats 2022-2023 

  • By September 30, 2022, cumulative green bond issuances had surpassed $2.0 trillion, with sovereign green bonds reaching $230.9 billion from 26 sovereigns. 
  • India, ranking as the sixth-largest issuer of green, social, sustainability-linked, and transition bonds (GSS+) in the Asia Pacific Region, held this position according to unpublished data from Climate Bonds. 
  • India targets to lower current emissions by 2030 and become a net-zero nation by 2070, requiring trillions of dollars in annual investments. 

The Approach to Driving Sustainability in India’s Finance 

In 2023, India announced two sovereign green bond issuances worth Rs 80 billion ($968 million) each as significant transformations in the financial and fiscal landscape. The funds raised from these sovereign green bonds were used for projects focused on enhancing energy efficiency, supporting clean transport, and fostering climate change adaptation. 

Funds Raised 

  • In 2023, Indian corporations raised $43 billion to fund the growth of renewable energy in the country since 2014. 
  • The Government of India raised Rs 80 billion through 10-year and 5-year green bonds and announced another tranche of Rs 80 billion in sovereign green bonds. 

Wrapping up 

India’s focus on sustainable finance is to attract more investments in green and climate-friendly projects, contributing significantly to the country’s transition toward a green and inclusive development path. 

Sustainable banking in India represents a pivotal step towards the financial sector with environmental sustainability. Banks can effectively assess environmental risks and streamline green financing processes by integrating innovative technologies, such as AI and data analytics. Embracing a positive approach to green financing, which has the potential for sustainable banking to drive positive environmental impact and optimize financial performance.  

  • Share :
scroll to top
WhatsApp icon for customer support on the footer of Block Stack Website Telegram icon for customer support on the footer of Block Stack Website