Key Points
Mumbai: The Reserve Bank of India (RBI) on Friday said it is not mandatory for banks and NBFCs to raise green funds, but in case they intend to do so they must follow the prescribed framework..
The central bank has issued a set of Frequently Asked Questions (FAQs) on the 'Framework for Acceptance of Green Deposits'...
In April 2023, it had issued detailed guidelines for acceptance of "green deposits" by banks and Non-Banking Financial Companies (NBFCs) wherein the funds could be used for financing activities like renewable energy, green transport and green buildings...
REs can temporarily park proceeds of green deposits, pending allocation towards green activities/projects, in liquid instruments with maximum maturity up to one year, it said.. Foreign banks can have a common global policy on green deposits, without prejudice to provisions of the framework for green deposits raised in India after June 1, 2023, it added...
The purpose and rationale for the framework is to encourage REs to "offer green deposits to customers, protect interests of depositors, aid customers to achieve their sustainability agenda, address greenwashing concerns and help augment the flow of credit to green activities/projects"...
