Daily Current Affairs for UPSC : 5June 2025/Green Finance in India

Why in the News? Anand Sinha, former RBI deputy governor, spoke at the 15th Annual Banking & Finance Conference in Mumbai, highlighting AI and green finance as pivotal for transforming India’s banking sector. He emphasized their role in strengthening digital infrastructure, boosting rural financial inclusion, and addressing climate risks that could cost India 3%–10% of GDP annually by 2100.

About Green Finance

Green finance involves financial instruments like green loans, bonds, and deposits that fund environmentally sustainable projects, such as renewable energy and climate adaptation initiatives. It aligns economic growth with environmental sustainability, mitigating climate risks while promoting eco-friendly development.

Significance of Green Financing

• Environmental Impact: Funds projects to reduce carbon emissions and combat climate change.

• Economic Stability: Enhances resilience against climate risks, safeguarding long-term economic growth.

• Sustainable Development: Supports eco-friendly initiatives, balancing economic and environmental goals.

Green Financing in India

• Key Initiatives: Green Hydrogen Mission, National Solar Mission, and Sovereign Green Bonds promote sustainable projects.

• RBI’s Regulatory Efforts: Encourages green loans, climate risk disclosures, and green deposits to integrate sustainability into banking.

• Economic Risks: Climate change could reduce India’s GDP by 3%–10% annually by 2100 if unaddressed.

• AI Integration: AI enhances digital infrastructure, improving rural financial inclusion and banking efficiency.

• Challenges: Systemic issues like limited digital access and infrastructure gaps hinder green finance adoption.