Climate risks: RBI moots common pool of projects

Governor says stress test guidance for regulated entities coming soon

- HARSH KUMAR

The Reserve Bank of India (RBI) is close to finalising disclosure norms for regulated entities to outline their climate risk management plan, and a guidance note for lenders to analyse climate scenarios and stress test for those risks, Governor Sanjay Malhotra said on Thursday.

Stressing the need for regulated entities to consider creating a common pool of bankable projects for climate-related finance, Malhotra said: "One of the oft-cited constraints to adequate flow of climate-related finance has been the lack of bankable projects. Thus, creation of a common pool of such bankable projects will have multi-fold benefits for the entire ecosystem."

"Regulated Entities with experience of such projects can contribute to the pool for the benefit of others, while also benefiting from such information shared by other Regulated Entities," he said.

Noting that the impact of climate change risks is not limited to the financial system alone but extends to the real economy, be it the corporates, MSMEs or the agriculture sector, Malhotra said this calls for a cohesive co-ordination and harmonisation in approach, among financial sector regulators, regulated entities as well as various government agencies.