The Reserve Bank of India (RBI) has announced a framework for accepting green deposits with an aim to encourage regulated entities to offer green deposits to customers, protect interest of the depositors, aid customers to achieve their sustainability agenda, address greenwashing concerns and help augment the flow of credit to green activities/projects.
The allocation of proceeds raised from green deposits must be based on the official Indian green taxonomy. As an interim measure, regulated entities will be required to allocate the proceeds raised through green deposits towards renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, pollution prevention and control, green buildings, sustainable management of living natural resources and land use, and terrestrial and aquatic biodiversity conservation. The allocation of funds raised through green deposits must be subject to an independent third-party verification or assurance on an annual basis. The framework will come into effect from June 1, 2023.