The State Bank of India has introduced the green rupee term deposit to allocate funds towards environmentally friendly initiatives and projects, it said in a press release on Jan. 12.
Green term deposits are open to resident individuals, non-individuals and non-resident Indians as well, through a branch network. Soon, the offering will be available through SBI's YONO app and internet banking services.
A green deposit is a fixed-term deposit for consumers who want to invest their surplus cash reserves in environmentally friendly projects.
SBI's green offering has tenors of 1,111 days, 1,777 days, and 2,222 days. It would help India develop a green finance ecosystem, the public sector bank said.
"By offering this innovative product, we stride towards fulfilling the ambitious goal of the government of India of making our nation net carbon-zero by 2070, fostering a greener and environmentally responsible financial future for all," said Dinesh Khara, chairman of SBI.
This comes after AU Small Finance Bank, in October last year, launched Planet First—AU Green Fixed Deposit—to support renewable and green projects. Several banks in India have also mobilised funds through green deposits recently to promote sustainable finance.
In the last few years, the Reserve Bank of India has been stressing the need for sustainable finance, thereby pushing lenders to mobilise funds through green deposits.
The RBI's framework on green deposits, dated Dec. 29, 2023, states that financial institutions must raise green deposits before looking to finance green projects. "Regulated entities cannot finance green activities or projects first and raise green deposits thereafter," it said.
The unallocated proceeds can be invested in liquid instruments with up to a one-year maturity, the RBI said.
The Indian government has been tapping funds through sovereign green bonds as a part of its borrowing programme. Investments by regulated entities in sovereign green bonds are also covered under the framework, the RBI said.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
