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Green Deposits: New framework for Green Deposits implemented from June 1, what is Green Deposit?

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The Reserve Bank of India ( RBI ) recently issued a framework for banks and non-banking financial companies ( NBFCs ) to accept green deposits.

Under this, from today i.e. June 1, financial companies will start offering as well as accepting green deposits. Such funds can be used for renewable energy, green transport and construction of green buildings. Explain that some regulated entities (RE) such as HDFC, IndusInd Bank, DBS Bank, Federal Bank and Central Bank of India are already offering green deposits for financing green activities and projects.

What is Green Deposit?

Green Deposit is a fixed term deposit for investors. Investors who want to invest their surplus funds in eco-friendly projects can invest in it. Green deposits are available for a specific purpose, which is not the case with other deposits. Apart from this, all the rules including maturity or redemption are the same for both.

According to RBI, financial institutions will extend the facility of green deposits in nine sectors, including the renewable energy sector. The other eight sectors include Energy Efficiency, Green Building, Clean Transportation, Sustainable Water and Waste Management, Pollution Prevention and Control, Sustainable Management of Living Natural Resources, Terrestrial and Aquatic Biodiversity Conservation and Land Use.

Why is it needed

Climate change is being seen as one of the most serious challenges in many countries around the world and many steps are being taken to reduce emissions and promote eco-friendly activities globally. Keeping this in mind, the RBI issued a framework on April 11 for banks to accept and promote green deposits.

In its framework, the RBI said, “The financial sector can play an important role in mobilizing and allocating resources for green activities and projects. The objective of this framework is to encourage REs to offer green deposits to customers and protect the interests of depositors.” To do.”

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