MUMBAI, October 19 — The Reserve Bank of India (RBI) issued a comprehensive regulatory framework on Monday mandating standardized Climate-Related Financial Disclosures for Scheduled Commercial Banks and top-tier NBFCs to insulate the domestic banking sector against climate transition shocks.
Harmonized with global guidelines formulated by the International Sustainability Standards Board (ISSB) and the Task Force on Climate-related Financial Disclosures (TCFD), the framework requires lenders to articulate board-approved strategies across four fundamental pillars: Governance, Strategy, Risk Management, and Metrics & Targets. Commercial institutions must formally assess how acute physical risks (cyclones, floods) and transition risks (carbon tax levies, fossil fuel obsolescence) affect default probabilities across their loan assets.
The central bank directed major banks to initiate phased public reporting from FY 2027–28, requiring audited disclosures of portfolio-level Scope 1 and Scope 2 greenhouse gas emissions alongside verified capital commitments supporting green hydrogen, rooftop solar, and electric mobility assets.
The conceptual economics of green financing, the structure of Sovereign Green Bonds issued by the Government of India, regulatory mandates under the Banking Regulation Act 1949, and the systemic risk assessments presented in RBI’s Financial Stability Report are core syllabus areas for RBI Grade B and UPSC GS-III.