Public sector banks lead in green deposit mobilisation

BANKSARE STEPPING up their focus on green deposits, with publicsectorlenders accounting for the bulk of collections so far.

- KSHIPRA PETKAR

However, growth remains at a nascent stage, and total amounts mobilised are still small compared to the overall deposit base of the banking system.

Green deposits area type of fixed deposit that allows investors to invest money in sustainable and eco-friendly initiatives.

According to Sachin Sachdeva, vice president - financial sector ratings at ICRA, “Any regulatory dispensation such as relaxation in cash reserve ratio (CRR) requirements for green deposits, if granted, may improve the unit economics of such deposits.”

Banks could pass on some of the benefits by offering rates closer to conventional term deposits, said Sachdeva. However, he cautioned that “CRR relief would only act as a marginal cost lever,’ and its broader impact on scaling up green deposits may remain limited.