Session: 2023-24

Subject: BANKING AND INSURANCE LAW

Title: GREEN BANKING IN INDIA: A STUDY OF VARIOUS

STRATEGIES ADOPT BY BANKS FOR SUSTAINABLE
DEVELOPMENT

Submitted To:

Mr. Shashank Pathak

Assistant Professor, DNLU, Jabalpur

Submitted By:

Ajinkya Kotasthane (BALLB/006/20)

Harshika Shaju Nair (BALLB/039/20)

Sujal Garg (BALLB/098/20)

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 ACKNOWLEDGEMENT

I would like to thank our Vice Chancellor (I/C) Shailesh Hadli for presenting me
with this opportunity to make project titled GREEN BANKING IN INDIA: A
STUDY OF VARIOUS STRATEGIES ADOPT BY BANKS FOR
SUSTAINABLE DEVELOPMENT. I would like to thanks Mr. Shashank Pathak
for guiding me every step of the way. The credit goes to all of them for the fact that
this research has materialized the way it did. A special thanks to them for assisting
me at each step of my project. I extend my heart-felt gratitude to my parents and
my friends for supporting me and aiding me in the accomplishment of this project.

with Regards,

AJINKYA KOTASTHANE
HARSHIKA NAIR
SUJAL GARG

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 ABSTRACT

As we move through the 21st century and the current globalized scenario, one thing that we
greatly miss is the loss of greenery. Due to the growing concern and anxiety that our society is
experiencing about the state of the environment, businesses and companies have begun to change
how they operate in an effort to add as much greenery as they can. Green banking refers to a
banking industry that combines technological advancements, operational improvements, and
shifting customer behavior. It entails encouraging environmentally beneficial behaviors. This can
take many different forms, such as utilizing internet banking instead of branch banking, paying
bills electronically rather than by mail, creating CDs and money market accounts with small,
local banks rather than with giant, multi-branch institutions, or identifying the neighborhood
bank that is doing the most to promote regional green projects. In order to improve our
environment's livability and increase our economic output, green banking's idea and application
have received significant attention in India.

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 TABLE OF CONTENTS

ACKNOWLEDGEMENT.................................................................................................................2

ABSTRACT.......................................................................................................................................3

TABLE OF CONTENTS.....................................................................................................................4

1 OBJECTIVE OF THE STUDY..................................................................................................6

2 HYPOTHESIS............................................................................................................................6

3 RESEARCH QUESTIONS........................................................................................................6

4 METHODOLOGY.....................................................................................................................6

5 INTRODUCTION......................................................................................................................6

6 COMPREHENSIVE UNDERSTANDING OF GREEN BANKING........................................6

7 A NECESSITY FOR GREEN BANKING................................................................................7

8 GREEN BANKING HAS IMPORTANT ROLE IN SUSTAINABILITY................................8

9 THE WAY FORWARD FOR SUSTAINABLE BANKING..................................................10

10 CONCLUSION.........................................................................................................................12

BIBLIOGRAPHY............................................................................................................................14

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 GREEN BANKING IN INDIA: A STUDY OF VARIOUS STRATEGIES ADOPT
BY BANKS FOR SUSTAINABLE DEVELOPMENT

1 OBJECTIVE OF THE STUDY

• To comprehend the function of green banking in national sustainable development.
• To draw attention to the steps Indian banks have made to become Green Banks.
• To talk about the various Green Banking techniques employed by major Indian
institutions.
• To learn about the possibilities that exist for banks in this region.

2 HYPOTHESIS
The need for green banking is urgent, thus banks should take the initiative to include
environmental and ecological considerations into their principles, forcing industry to adopt the
necessary technology and management techniques.

3 RESEARCH QUESTIONS
 Whether the banking industry can play a significant role in developing socially
responsible and ecologically sustainable institutions in the context of economic growth
and environmental conservation?
 Whether an appropriate framework of cost-efficient regulations and economic
instruments is required for sustainable development?

4 METHODOLOGY
The current study article is conceptual in nature and is based on several sources, including a
comprehensive assessment of the literature, financial institution websites, and literature reviews.

5 INTRODUCTION
The financial industry is seeing a rise in "green banking." In order to promote overall sustainable
development, banks, which act as the agent for financing economic and developmental activities,
are crucial. 1For banks to become significantly more environmentally friendly, the phrase "green
banking" caring about the environment. By "green banking," we mean creating solutions for
inclusive banking that will guarantee long-term economic growth. It creates operational, technical,
1
M.soundarya, Impact of Green Banking in India: Opportunities and Challenges, SSRN (Jun. 28, 2021)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3875363, (Last visited Nov 18, 2023).
6
and customer behavior changes in the banking industry. A more inclusive banking system that
takes into account the interests of clients, the bank, and the environment has emerged as a result of
recent advancements in Indian banking technology.2 Green banking was first introduced in 2009 in
Mount Dora, Florida, in the United States. The State Bank of India (SBI), the country's largest
commercial bank, is the country's first green bank. It took the initiative to develop high
sustainability standards and finished the first phase of "green banking" with Shri. O.P. Bhatt is the
SBI chairman. Launch the first wind farm project for the bank in Coimbatore. The green bank
effort, which entails ATMs, paperless banking for clients, and the construction of wind turbines in
rural India. In order to reduce internal and external carbon footprints, green banking involves
assuring eco-friendly processes in the banking industry. In the banking industry, it produces
operational and technical advancements as well as changes client behavior.3 As a result, banks
must incorporate green practices into their daily business operations, physical infrastructure,
financial decisions, and financing plans. Sustainable development may greatly benefit from green
banking.4

6 COMPREHENSIVE UNDERSTANDING OF GREEN BANKING

Environmental protection is the first goal of green banking, often known as ethical banking.
Whether a project is environmentally friendly or not is one of the many aspects ethical banks
take into account before approving a loan. Loans are only granted to businesses that adhere to all
environmental safety regulations. India is developing extremely quickly, and the industrial sector
is the key factor driving this growth. Controlling the effect of the nation's commerce on the
environment, however, is a significant task.5

The banking industry is the main source of funding for these businesses. Therefore, the banks'
involvement in limiting environmental harm is crucial. As they break from the shadow of
conventional banking, banks are starting to acknowledge that they have a social obligation to
uphold. 6Banks must consider the consequences of their lending and investment decisions due to

2
Ibid.
3
Nitin S N, Opportunities, Challenges, Initiatives and Avenues for Green Banking In India, 6 INT. J. BUS. MANAG.
INVENT. 12 (2017), HTTPS://WWW.IJBMI.ORG/PAPERS/VOL (6)2/VERSION-3/B0602031015.PDF, (Last visited Nov 15,
2023).
4
Ibid.
5
Suresh Chandra, Green banking-towards socially responsible banking in India, 4 INT. J. BUS. INSIGHTS TRANFORM
82 (2010) https://web.s.ebscohost.com/abstract? (Last visited Nov 19, 2023).
6
Ibid.
7
the relatively indirect nature of their environmental and social implications. The negative effects
of operational operations can be lessened by include environmental and social considerations in
company decision-making. Financial institutions have a lot of potential to support sustainability
and CSR initiatives. Promoting eco-friendly behaviors and lowering the carbon footprint of
financial operations are both parts of "green banking." Any combination of the aforementioned
individual banking methods can benefit the environment.7

In order to solve environmental challenges and seize new possibilities, businesses are currently
becoming more and more interested in developing and putting into action plans. 8There are many
reasons to go green, but the most important ones include rising energy prices and consumption,
rising consumer interest in eco-friendly products and services, rising public expectations of
business environmental responsibilities, and the emergence of more stringent regulatory and
compliance requirements.9

7 A NECESSITY FOR GREEN BANKING

Green banking is one of the procedures for ensuring sustainability, in which company activities
have no unfavorable effects on the environment. Additionally, risk management and
environment management are the same. Due to the fact that it eliminates many risks in the
financial industry, it is crucial for banks as well as the economy. As a result of their ability to
make a large contribution to SD, banks have an intermediate role in the economy. In addition to
ensuring the greening of industries, green banking also assists banks in enhancing the quality of
their future asset holdings.

By demonstrating and supporting the bank's environmental commitment, green banking

improves the bank's reputation. It also lowers operational costs by using less office supplies,
energy, and water, boosts employee productivity and efficiency through expert and optimal use
of technology, and lowers risks by putting in eco-friendly machinery. By using less paper, it
saves a lot of trees; it lowers greenhouse gas emissions by teleconferencing and setting up a
transportation pool for staff; it helps consumers become more environmentally aware by

7
Shikha Agrawal, Green Banking in India: an Empirical Study of Commercial Banks, 2 VOICE OF RESEARCH 14
(2014), HTTP://WWW.VOICEOFRESEARCH.ORG/DOC/MAR-2014/MAR-2014_17.PDF (Last visited Nov 18, 2022).
8
Dr.sarita Bahil, Green Banking “The new strategic imperative”, 2 ASIAN J. MANAG.45 (2012)
9
Dr.G.Jayabal & M, soundarya, Green Banking as banks Initiative for sustainable Development, 7INT J INF MANAGE
280 (2016).

8
organizing awareness campaigns; and it lessens the amount of non-performing assets by investing
in less risky projects. In the banking sector, "green banking" refers to technological developments,
operational enhancements, and a change in customer behavior.

Energy conservation, recycling, ride-sharing, and environmentally friendly loans are frequently
included in green banking programmes. Industries would be compelled to follow specific
standards in order to do business due to strict environmental restrictions implemented by
competent authorities throughout countries. The ability of employees and consumers to represent
environmental sensibility is improved. By reducing expenses and increasing the nation's GDP,
green banking helps save money and energy.10

8 GREEN BANKING HAS IMPORTANT ROLE IN SUSTAINABILITY

Green banking is a new idea that integrates environmental management and banking operations
with the goal of changing the financial industry and creating new, sustainable green banking 257
11
business models. Analyzed the process of green finance for SD in Pakistan found that scope of
green finance is immense as it helps to curb environment issues in addition to making firms more
accountable and competitive in reducing carbon emission. 12 It has been studied relationship
between banks and sustainability found that banks are taking more dynamic approach since last
20 years toward attaining sustainability across the world. 13 It has been explained green banking,
an initiative by the banks to encourage the development of environmental-friendly enterprises
and also helps in the process of natural environment restoration. However, green banking,
according to the Indian Banks Association, is standard banking system that takes into account all
social and environmental elements in order to promote ecological sustainability and the best
possible use of natural resources.14 Sahi refers to green banking to environmentally friendly

10
Ajaz Akbar Mir, Green banking and sustainability – a review, EMERALD (Nov. 18, 2023),
https://www.emerald.com/insight/content/doi/10.1108/AGJSR-04-2022-0017/full/pdf?title=green-banking-and-
sustainability-a-review (Last visited Nov. 20, 2023).
11
G. Pathak, Environmental sustainability through green banking: A study on private and public sector banks in
India, 6 INT. J. SUSTAIN. DEV. WORLD ECOL 48 (2013),
https://www.emerald.com/insight/content/doi/10.1108/AGJSR-04-2022-0017/full/pdf?title=green-banking-and-
sustainability-a-review (Last visited Nov. 18, 2023).
12
Mumtaz, M. Z.., Green finance for sustainable development in Pakistan 19 INT. J. RES 34 (2019).
13
Jeucken, M. H. A., & Bouma, J. The changing environment of banks 27 J. ENVIRON. MANAGE. 35 (1999).
14
Bhardwaj, B. R., & Malhotra, A., Green banking strategies: Sustainability through corporate entrepreneurship 3
Greener J. Bus. Manag. Stud. 193 (2013).

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banking system that helps to prevent environmental deterioration in order to make this world more
livable.15

Green banking being strikingly important toward achieving the UN set sustainable goals;
therefore, the implementation of green banking is the main focus of the Central Bank of
Bangladesh as found. 16In the Indian city of Coimbatore, GB practices (environmental training of
workers, energy-efficient operations, green policy and overall green initiatives) had a favorable
impact on banks’ environmental performance found.17

The goal of green banking is to achieve sustainability, growth and the development that is
sustainable through eco-friendly and sustainable banking system and sustainability can also be
achieved using online banking, e-banking and adhering to the 3D strategy (de-materialization, de-
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carbonization and demobilization) in the bank’s daily operations. After reviewing the above
literature, it can easily be assessed that green banking and sustainability has a positive and
significant relationship towards sustainable growth and development across the world. Therefore,
previous literature supports the idea that despite having substantial risk exposure, the financial
sector has responded to the sustainability issue very perfectly as being the intermediate function in
the economy; hence, it is concluded that green banking can never be ignored to achieve
sustainability.19

Green banking can help in fighting all these challenges. It is one of the most important pillars
20
toward achieving sustainability. Banks are one of the most significant professional bodies that
engage with the general public and have potential for the country’s long-term development by
raising public awareness and offering education. Internal activities such as the use of electricity,
water, paper and the quantity of various waste produced during banking operations.21

Some internally and externally driving forces can help banks support greening. 22 Employees,
15
Sahi, A., & Pahuja, A., An empirical study on the effectiveness of green banking practices in SBI, 10 ADALYA 14
(2020).
16
Akter, N., Siddik, A. B., & Mondal, M. S. Al, Sustainability reporting on green financing: A study of listed private
sustainability reporting on green financing: A study of listed private commercial banks in Bangladesh , 12 J. BUS. &
TECH. L. 27 (2018).
17
Vidyakala, K., A study on the impact of green banking practices on bank’s environmental performance with
special reference to Coimbatore city, 15 AFR. J. BUS. ECON. RES. 6 (2020).
18
Hossen, M. M., Uddin, M. N., & Hossain, A. E-commerce: A scrutiny about the environmental commerce through
upgrading the environmental sustainability, 1 BUP JOURNAL 103 (2014).
19
Supra note 11.
20
Ibid.
21
Supra note 14.
22
Supra note 16.
10
investors and directors are internal driving factors who can be driven to greenery and create green
products and services, as well as make environmentally friendly policies, and, therefore, contribute
to sustainability.23 The green marketing plan is now being used by banks to indicate a responsible
corporate marketing activity that views environmental concerns as possibilities for development
and growth and verifies them throughout all operations.24

9 THE WAY FORWARD FOR SUSTAINABLE BANKING

The SDGs from the UN provide a holistic approach to sustainability that takes into account the
environment, society, and economics. All of these factors must be taken into account in order to
create a sustainable planet.

Leading banks have begun committing to sustainability in a range of areas. In order to become a
sustainable business, banks must plan and reevaluate their business strategies. Investments in
environmentally destructive industries like mining, for instance, may be banned or curtailed while
support for industries that produce or use alternative energy might rise. Employee education is
necessary so that they can accept rules and procedures and understand why they are followed.25

Green standards will soon become the norm in the BFSI as central banks and financial services
regulators push the right buttons to force institutions to reveal their sustainability plan. It will be
necessary to have policies and processes for risk management and regulatory reporting. To
understand ESG data, banks must collect the appropriate information and implement sophisticated
analytics tools.26 Investments in renewable energy, green bonds, and sustainable infrastructure
financing are just a few examples of the high-growth sectors that make up green finance. Only
with significant private sector investment are low-carbon emissions and net-zero emissions
feasible. The mismatch between financial and sustainability rules has created difficulties, and a
green taxonomy must develop to specify the types of activities that can be included in green
financing. There must be standards, norms, and principles.27

Banking Sustainability is also being adopted in IT infrastructure. In addition to considerably

lowering costs, using a cloud-based infrastructure minimises carbon footprint and emissions.
23
Ibid.
24
Sahi, A., & Pahuja, A., An empirical study on the effectiveness of green banking practices in SBI, 10 ADALYA 14
(2020).
25
Nitin S N, Opportunities, Challenges, Initiatives and Avenues for Green Banking In India, 6 INT. J. BUS. MANAG.
INVENT. 12 (2017), HTTPS://WWW.IJBMI.ORG/PAPERS/VOL (6)2/VERSION-3/B0602031015.PDF, (Last visited Nov 15,
2023).
26
Ibid.
27
Supra note 10.
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Additionally, banking digital transformation makes banks more responsive and highly
productive.28

ESG implementation in banking is difficult, calling for both advanced technical know-how and a
high degree of expertise. Organizations will need to comprehend the data points that must be
gathered both now and, in the future, as well as the metrics that must be communicated both inside
the organisation and with external parties in order to comply with laws and regulations. For risk
management, they should spend money on technology. Investing in a strong data and analytics
platform and prioritising automated operations are other important steps for banks to take.29

Long-term, sustainable banking will contribute to the perception of a responsible firm, fulfil the
needs of a better-informed consumer, follow new legislation, and provide new business prospects.
Although the shift to sustainable banking has mostly been a step in the right direction, it will soon
go from being "good to have" to "being compliant." Banks may expand their customer base and
improve the quality of their services with the correct policies, processes, and technological
investments.30

28
Dr.G.Jayabal & M,soundarya, Green Banking as banks Initiative for sustainable Development, 7INT J INF MANAGE
280 (2016).
29
Ibid.
30
Anonymous, Sustainable banking - What’s next?, (Aug. 22, 2018 ), INFOSYS BPM ( AUG 22 , 2018 ),
https://www.infosysbpm.com/blogs/financial-services/sustainable-banking-whats-next.html ( Last Visited Nov 18,
2023 )

12
 10 CONCLUSIONS
Indian banks have not yet agreed to the "Equator Principles," a set of social and environmental
standards in which there are 62 signatories including banks and financial organizations from all
around the world. Even for the sake of keeping records, none of the Indian banks have followed
the equator idea. The Equator Principles are undoubtedly underappreciated in India. It is
important for India to take some significant actions to progressively follow the equator principles
and standards, which apply environmental-sensitive criteria in addition to financial ones to
support projects.

Leading banks have a general understanding of the rules, but the Reserve Bank of India is
waiting to take the lead in the public sector, and private sector banks appear to be only willing to
commit if there is regulation or a financial incentive. Indian customers' lack of interest in the
topic is due to banks' unwillingness to publicly state their commitment to conducting business in
an ethical and responsible manner. It is imperative that Indian banks are well informed of the
environmental and social standards that banks globally have agreed to. The cost of banks
adhering to environmental and social standards will be quite high.

However, it is crucial that Indian banks understand their obligations as global corporate citizens
if they are to expand into western markets and take a bigger role in the global economy. Asian
social groupings and settings that are vulnerable are heavily influenced by Indian banks. They
now need to think carefully about how they feel about responsible financing on a national and
international level. This demonstrates the lack of knowledge Indian banks have about global
green banking efforts.31

Despite their active role in in the developing economy of India, India's banks have not taken
much action in this area. It has become imperative to consider potential legislative changes and
initiatives to advance green banking in India. Banks should take a proactive role in including
environmental and ecological factors as part of their lending principles in order to push
enterprises to make mandatory investments for environmental management, use of relevant
technology, and management systems in a market economy that is quickly changing and where
market globalization has increased competitiveness. Making the banking and financial industry

31
Nigamananda Biswas, Sustainable Green Banking Approach: The Need of the Hour, 1 BUSINESS SPECTRUM 33
(2011), http://admin.iaasouthbengalbranch.org/journal/1_Article5.pdf (Last Visted Nov. 20, 2023)
13
contribute to sustainable development is important. India's banks are lagging behind the rest of
the world when it comes to green banking, thus urgent action is required to ensure the country's
long-term economic viability.

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BIBLIOGRAPHY

 Ajaz Akbar Mir, Green banking and sustainability – a review.

 Akter, N., Siddik, A. B., & Mondal, M. S. Al, Sustainability reporting on green
financing: A study of listed private sustainability reporting on green financing: A study
of listed private commercial banks in Bangladesh.
 Anonymous, Sustainable banking - What’s next?
 Bahl, S., The role of green banking in sustainable growth.

 Bhardwaj, B. R., & Malhotra, A., Green banking strategies: Sustainability through
corporate entrepreneurship.
 Bihari, S. C., Green banking towards socially responsible banking in India.
International Journal of Business Insights & Transformation.
 Biswas, N., Sustainable green banking approach: The need of the hour.

 Dr.G.Jayabal & M, soundarya, Green Banking as banks Initiative for sustainable

Development.
 Dr.sarita Bahil, Green Banking “The new strategic imperative”
 G. Pathak, Environmental sustainability through green banking: A study on private
and public sector banks in India.
 Hossen, M. M., Uddin, M. N., & Hossain, A. E-commerce: A scrutiny about the
environmental commerce through upgrading the environmental sustainability
 Jayalakshmi, M., Green Technology: A Contribution to Sustainable Development in
India.

 Jeucken, M. H. A., & Bouma, J... The changing environment of banks.

 Khanna, A., Indian Banking Sector towards a Sustainable Growth: A Paradigm Shift.

 M.soundarya, Impact of Green Banking In India: Opportunities and Challenges.

 Mumtaz, M. Z.., Green finance for sustainable development in Pakistan.
 Nigamananda Biswas, Sustainable Green Banking Approach: The Need of the Hour.
 Nitin S N, Opportunities, Challenges, Initiatives and Avenues for Green Banking In
India.

15
 Prakash, A., Managing sustainability in banking: extent of sustainable banking
adaptations of banking sector in India.
 S. K., Social and innovative banking strategies for sustainable banking in India.

 Sahi, A., & Pahuja, A., An empirical study on the effectiveness of green banking
practices in SBI
 Sahi, A., & Pahuja, A., An empirical study on the effectiveness of green banking
practices in SBI.
 Shikha Agrawal, Green Banking In India: An Empirical Study of Commercial Banks.
 Singh, S., Green Technology: A Contribution to Environment Sustainable
Development in India. Embracing change & Transformation.

 Suresh Chandra, Green banking-towards socially responsible banking in India.

 Udarshan Giramkar, Green Banking in India: A Study for Sustainable Development.

 Vidyakala, K., A study on the impact of green banking practices on bank’s

environmental performance with special reference to Coimbatore city.

16