Business Standard

SBI seeking lower CRR on green deposits: Khara

Bank begins assessment of borrowers on ESG parameters

- ABHIJIT LELE Mumbai, 16 February

Country’s largest lender State Bank of India (SBI) has requested the Reserve Bank of India (RBI) for a lower cash reserve ratio (CRR) on green deposits raised from customers, SBI chairman Dinesh Khara said on Friday.

Currently, banks have to maintain a CRR of 4.5 per cent on their total deposits, with no distinctio­n provided for green deposits.

According to Khara, SBI had put across two proposals — one was the reduction in CRR on green deposits, and two, making that as part of the overall policy for all banks. He was speaking at Indian Institute of Management Kozhikode’s Annual Conference on Macroecono­mics, supported by National Stock Exchange (NSE), on Friday.

The lender has also begun to assess borrowers on environmen­tal, social, and corporate governance (ESG) parameters and is sharing this informatio­n with them to enhance awareness.

However, the bank is not pricing loans based on the standing of borrowers on ESG parameters.

Khara said the bank has asked for regulatory approval for differenti­al pricing of green deposits.

In January, SBI floated a green rupee term-deposit scheme to raise money for financing environmen­tfriendly projects.

Besides approachin­g retail customers, it is tapping family offices, entities that manage money for high net worth (HNI) individual­s, for garnering green money.

These would be medium and long-term deposits with three maturity buckets — 1,111 days, 1,777 days, and 2,222 days. These deposits are available at 10 basis points (bps)

The green component is to be captured across organisati­ons. There will be a need for its auditing since those who are sources for green funding will like to have some credible numbers DINESH KHARA SBI chairman

below the card rate for retail deposits.

Besides deposits, the lender has approached markets to raise green funding. In December 2023, it had placed $250 million senior unsecured green floating rate notes maturing on December 29, 2028.

Khara said in another two-three years, ESG parameters will start to have an impact on pricing of loans. There is increasing awareness being created in the ecosystem which will eventually start impacting pricing.

As for norms to track green assets and liabilitie­s, he said there has to be some accounting standards. These can be provided by bodies like the Institute of Chartered Accountant­s of India.

“The green component is to be captured across organisati­ons. There will be a need for its auditing since those who are sources for green funding will like to have some credible numbers. SBI is also engaging with some entities to see if an accounting standard can be set for green financing,” Khara said.

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