There is a need to mainstream green finance and formulate ways for incorporating environmental impact into commercial lending decisions, RBI Deputy Governor M Rajeshwar Rao has said.

Addressing climate risk in the financial sector should be the joint responsibility of stakeholders as it would affect the resilience of the financial system in the long run, the Deputy Governor said. He made these comments while speaking at the CAFRAL Virtual Conference on Green and Sustainable Finance) recently. "As the risks and opportunities and financial impact arising from climate change vary across jurisdictions, this poses unique considerations for emerging economies like India. "The challenge before us is to mainstream green finance and think of ways to incorporate the environmental impact into commercial lending decisions while simultaneously balancing the needs of credit expansion, economic growth and social development," Rao said.

He noted that the global understanding of the impact of climate change on the economy and the financial system is evolving and, accordingly, the responses of central banks and supervisors around the world have also been developing.

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