Have you heard about the term green banking or green banking? If no, then through this post we are going to tell you about what is green banking, role of green banking in India, benefits of green banking, definition of green banking etc. Almost all the banks and financial institutions are promoting green banking.
What is Green Banking or what is Green Banking?
According to the Indian Banks’ Association (IBA), a green bank is like a normal bank, which considers all social and environmental/ecological factors with the objective of protecting the environment and conserving natural resources. It is also known as ethical bank or sustainable bank.
Banks play an important role in environmental protection and economic development by promoting environmentally sustainable and responsible institutions. This type of bank is called “Green Banking”. On-line banking is a great example of green banking. In India also major Indian banks adopt green banking system.
Green banking was introduced in the state of Florida in 2009. In India, State Bank of India (SBI) took the first step towards green banking initiative. Green banking signifies the combination of technology, operational improvements and changing customer habits and needs in the business of banking.
Adoption of green banking practices will not only benefit the environment, but also result in reduction in costs, lesser frauds and errors, greater operational efficiency in the activities of banks, which is a good sign for the economy of any country. With is very necessary.
Meaning of green banking in India
Green banking or green banking refers to reducing carbon footprint from daily banking activities and promoting environment friendly activities.
Green banking is like a normal bank, considering all social and environmental factors; It is also called ethical banking.
Green banking or green banking has been started with the aim of protecting the environment. These banks operate like a normal bank and are regulated by the same authorities as a traditional bank.
Like – 1. Paying bills online, 2. Using online banking instead of branch banking, 3. Reducing banking paper work, 4. Systematic transactions and transactions in banks, 5. Banking cash 6. Using Bank UPI or App, 7. Reducing operational cost and increasing efficiency, 8. Promoting the use of online banking among customers.
Green banking is a new phenomenon in the financial world. Green banking is a term used by banks to make them more responsible towards the environment. These banks give more importance to environmental factors, they aim to provide good environment and clean banking activities.
Foreign banks are practicing on a lot of green banking projects. Indian banks are still slowly working on this new form of banking. However, many of them are willing to actively pursue this strategy.
Green banking seeks to encourage banks to encourage environmentally friendly investments and to prioritize lending to industries dedicated to the environment. Countries with the world’s largest economy are moving towards adopting green banking.
They check all the factors before giving the loan, whether the project is eco-friendly, you will be given the loan only if you follow all the environmental protection standards.
Green Banking: Financial Products and Services
Various banks and financial institutions offer their financial products and services to promote green banking. Which mainly includes the financial services mentioned below.
Mobile Banking and Online Banking
Online banking involves less paperwork, less fraud and fewer visits to branch offices by bank customers, all of which have a positive and favorable impact on the environment.
Green Loan
Green loan refers to lending to a project or business that is considered to be environmentally sustainable and that complies with all environmental standards.
Green Mortgage
Green mortgage refers to the type of mortgage. Generally, green home mortgages are referred to as energy efficient mortgages (EEM’S). This is an exemplary effort to promote green banking system.
Green Credit/Debit Cards
Green credit cards and debit cards are used as eco-friendly rewards, for using biodegradable credit and debit card materials or to promote paperless banking.
Green Savings Account
Green Savings Account is considered as one of the best efforts to promote paperless green banking. The more the customers save, the more the environment is benefited as a contribution made by the banks.
Benefits of Green Banking
| less paperwork | cost cutting |
| increase productivity | reduce banking cash |
| improve profitability | asset liability management |
| face fewer risks | online deposit and payment |
| Business awareness about environment | loans at comparatively low rates |
| Environmental Standards for Lending | Improvement in banking service standards |
| automation of manual tasks | increase in profitability and sales |
| Improvement in Non-Performing Asset (NPA) | use online banking |
| Enhancing Green Banking Activities | Managing Changes in Interest Rates |
| Handling Fluctuations in Foreign Exchange Rates | comply with regulatory requirements |
| Providing best satisfaction in customer service | contribute to the country’s economy |
Green Banking Initiatives in India
Government of India has issued guidelines to Banks and Financial Institutions for Green Banking Initiative. In order to implement these directions, all centralised, regional rural and public sector banks have been asked to:
- Increase the use of electronic payment methods.
- Use of CBS (Core Banking Solution) should be increased.
- Use of video conferencing should be encouraged.
- Customers can solve their banking activities online.
- Offer centralized payment systems like RTGS and NEFT.
Green banking initiative has been taken by the government and banking institute for environment protection which is a good thing for our economy. Definitely, in coming time all financial institutions will try to give best service to their customers by adopting this green banking system and will try to contribute tremendously to Indian economy.