A Study on Significance of Green Banking for Sustainable Banking and Economic Development in India

Abstract

The sustainable services sector has the potential to play a mediating role between the promotion of economic development and the safeguarding of the environmental banking. Because this type of banking seeks to encourage environmentally responsible and socially responsible investment, it is sometimes referred to as “Green Banking.” Allowing markets to function within an appropriate framework that is comprised of cost-efficient rules and economic tools is the most effective method for achieving sustainable development. Financial institutions, such as the banking sector, are examples of one of the key economic factors that have a significant influence on total industrial activity and economic development. Because of the globalization of the economy, businesses and industries are at risk of being targeted by strict environmental rules, harsh legal actions, or consumer boycotts. Because the industrial sector is one of the key stakeholders in the banking sector, it is possible for it to be exposed to credit risk as well as liability risk. Green activities by banks include “internal environment management, environmental financing/product ecology, environmental disclosure and reporting, creating and implementing principles and supporting other stakeholders”. This paper examines the significance of green banking, provides examples from other countries’ experiences, and focuses on the most essential takeaways for sustainable banking and economic development in India. In addition to this, an effort has been made to catalogue viable alternatives for green banking.