Last Tuesday, the Reserve Bank of India announced a new framework for accepting "green deposits" in hopes of increasing funds allocated toward renewable energy and clean transportation projects (Reuters, Bloomberg). Under the framework, regulated entities will be allowed to issue green deposits on a cumulative or non-cumulative basis, which can be renewed or withdrawn by the depositor, and will be required to establish a board-approved financing framework for effective allocation of the deposits. The deposits will be denominated in Indian rupees, and funding will be subject to annual third-party scrutiny.

The new framework is part of the central bank's push to enact regulations that encourage India's banks to lend more to environmentally friendly projects and mitigate risks from climate change (Bloomberg). The types of projects where funds raised through green deposits can be allocated include renewable energy, energy efficiency, waste management, and organic farming. According to the central bank, "[g]reen finance is ... progressively gaining traction in India" (Reuters). India is currently ranked 104th out of 192 countries in a climate readiness index assembled by the Notre Dame Global Adaptation Initiative, and has pledged to achieve net zero emissions by 2070 (Bloomberg).