RBI plans drive to address climate change risks

Under its regulatory sandbox initiative, the Reserve Bank of India (RBI) will set up a dedicated ‘on Tap’ cohort on climate change risks and sustainable finance.

Speaking at the Policy Seminar on Climate Change Risks and Finance organised by the RBI in New Delhi, on Thursday, the RBI Governor Sanjay Malhotra said the Bank has been encouraging and facilitating innovations through its Regulatory Sandbox and Hackathon initiatives in the fintech space.

He said the RBI has proposed to set up a dedicated ‘on Tap’ cohort on climate change risks and sustainable finance under RBI’s Regulatory Sandbox initiative. “We are also planning to conduct a special ‘Greenathon’ on climate change and related aspects,” Malhotra said.

He said there are two dimensions to climate change-related risks that regulators, policymakers and practitioners have to be aware of — the first is facilitative involving capacity building, development of the ecosystem and financing of green and sustainable transition; and the second is the prudential aspect, which is related to risk management.

Malhotra said the role of the Central Banks in managing risks posed by climate change to the financial system is increasingly being recognised, their role in facilitating the financing of green transition has been a matter of debate.