GREEN DEPOSITS
WHAT ARE GREEN DEPOSITS?
- The deposits raised under this banner should be deployed towards projects earmarked for green financing.
- At present the rates on these deposits aren’t significantly different from regular deposits.
- Green financing is lending to or investing in projects which contribute towards:
- Climate risk mitigation
- Climate adaptation and resilience,
- Other climate related or environmental objectives including biodiversity management and nature based solutions.
GREEN DEPOSITS Vs NORMAL DEPOSITS
- Normally, deposits cannot be allocated for specific projects. They go towards the common deployment pool.
- With green deposits, they are carved out specifically towards green financing.
- This is the biggest difference between the two.
- This apart, all the rules applicable to normal deposits will be applicable to green deposits.
- For instance, upon maturity, the depositor has the option to redeem or carry forward the deposit.
MORE ABOUT GREEN DEPOSITS
- Entities raising green deposits should put in place a ‘financing framework’.
- Third-party verification of the allocation and utilisation of the green deposits is mandatory.
- But there are no penal provisions, if funds are not adequately deployed by a bank,
SYLLABUS: PRELIMS, INDIAN ECONOMY
SOURCE: BUSINESS LINE