Indian Banking Sector towards a Sustainable Growth: A Paradigm Shift

Many countries are changing their approach because of turbulence in environmental issues like weather shocks, climate change, cost of fossils and fuels to basic infrastructure and industrial planning, desire to design more sustainable, resilient pathways to economic growth and are taking Green steps. This environmental turbulence is not giving any corporate any option to initiate the green and sustainable practices rather it is the need of today. Banks can provide important leadership for the required economic renovation that will provide new opportunities for financing and investment policies as well as portfolio management for creation of a strong and successful low carbon economy. The main objective of this paper is to deeply understand how Indian banks are responding to environmental turbulence and to provide an overview of their action in view of green banking adoption, awareness, drivers, challenges and gaps etc by a structured questionnaire supported by secondary data and reports published .The results reveal that there is a small group of banks in India that are leading the sector in tackling climate change, mapping of carbon footprints internally and externally. Internationally, there are several initiatives underway but the response of Indian banks is tardy and sluggish especially in internationally consistent disclosures and environmental protocols, which not only can spur innovation but also helps in pinpointing risk and also generate opportunity. This trend is clearly exhibited in major international initiative UNEP FI there is no single Indian signatory and only eight Indian signatory in CDP-India including HDFC Bank Ltd, IDBI Bank Ltd, Induslnd Bank Ltd ,IDFC, Reliance Capital, State Bank of India, Tata Capital Ltd ,Yes Bank Ltd. Main reasons and challenges faced by Indian banks which are shown by factor analysis include 'Risk of failure of business to peers' and 'Lack of RBI mandates' as main barriers to adopting sustainability. Main drivers for employing environmental and sustainable issues are environmental and social pressure from society, improved brand reputation, opportunities for innovation, The main gaps Identified by the Indian Banks requiring directives from regulatory bodies include awareness and consciousness on sustainability issues, international guidelines and frameworks, Sustainability reporting - formal frameworks and lucid and clear policies pertinent for banks operating in India, training and development of relevant skills within bank employees so that they can use in core banking operations. Clear policies, Formal inf