Asian Journal of Multidisciplinary Studies ISSN: 2321-8819 (Online)

Volume 2, Issue 6, June 2014 2348-7186 (Print)

Impact Factor: 0.923 (JIF)

Green Banking: An Overview

Komal Singhal1, Krishna Singhal2, and Monika Arya2

1
Assistant Professor, Kalindi College, University Of Delhi, India
2
Assistant Professor, Bharati College, University Of Delhi, India

Abstract: Global Warming & Climate change are the main two discussed issues worldwide.
These issues are caused mainly by human activities like burning fossil fuels for heat & energy,
cleaning forest, fertilizing crops, storing waste in landfills, raising livestock and producing some
kinds of industrial products which adversely impact our health, environment and economy. Hence
some measures need to be taken urgently to save the environment from these issues. Being a
financial organization of the country which is responsible for financing the economic and
developmental activities of the country, banks have to address these above issues, both in terms of
its obligations & opportunities by virtue as a responsible corporate citizen & as a financier. In this
paper we tried to find out the ways in which banks can „Go Greener „ and some of the green
banking initiatives taken by the banks in India.

Key words: Climate Change, Global Warming, Green Banking, Environment.

INTRODUCTION Sharma, K & Gopal in their study “A Study on

Customer Awareness on Green Banking
Today every business organisations and initiatives in selected Public & Private sector
corporations are adopting „GO GREEN‟ concept banks with special reference to Mumbai”
because of the increasing friendly attitude of the identified the opinion and awareness of bank
society towards the environment. Banks play a employees and customers as regards to green
critical role in the economic development of the banking concept in Public and Private sector banks.
nations by providing various Socio-Economic They found that green initiatives like
activities like Job creation, wealth generation, Communication through press, Bank environmental
Poverty eradication, entrepreneurial activity etc. policy, Concession on energy savings, Solar
Besides these activities, banks are introducing the ATMs, Green CDs is not familiar in green
practices of green banking in order to protect the initiatives by the bank as per the respondents.
environment and to reduce carbon emission. This
will not only be useful for environment but it will Chaursia (2014) in his paper “Green Banking
also provide benefits to the banks in terms of practices in Indian Banks” highlighted the
greater operational efficiencies, a lower benefits, confronting challenges, strategic aspects
vulnerability to manual errors & fraud & cost of green banking & also the status of Indian banks
reduction in banking activities. regarding green Banking adoption. He found that
there has not been much initiative in this regard by
OBJECTIVES OF THE STUDY the bank in India. Bank should go green & Play a
proactive role to take Environmental and
1. To study the concept of Green Bank.
Ecological aspects as part of their lending
2. To know about the ways in which banks can principle, which would force industries to go for
protect the environment. mandated investment for environmental
management , use of appropriate Technologies and
3. To highlight Green Banking initiatives by management systems.
various banks in India.
Yadav & Pathak in their paper “ Environmental
LITERATURE REVIEW Sustainability through Green Banking: A study
on Private & Public sector Banks in India” study
Bahl, Sarita (2012) in her empirical study on the various green banking approach adopted by
“Green Banking – The new strategic Private & Public Sector Banks in India for
imperative” tried to find out the most significant environmental sustainability and phases of green
strategies while going ahead with green banking by marketing initiatives of the banks using Case Study
using Garrett‟s ranking technique. She found that Approach. They found that except ICICI Bank,
Carbon footprint reduction by Green building has Public sector banks have taken more green
been given top priority in green banking strategies. initiatives as compared to Private sector Banks.
Green banking financial products has also been Secondly they found that only ICICI Bank was
given due weightage. However, Paper less banking found suitable to the third phase of Green
and using mass transportation system have been marketing –Towards the third stage: Sustainable
rated low as green banking strategies. Green marketing. Most of the banks were

Available online at www.ajms.co.in 196

Green Banking: An Overview

categorised in the environmental green marketing : HOW CAN BANKS GO GREENER

The second age and taking initiatives which are
beneficial to the environment. In Today‟s World, every institution is trying to
reduce carbon footprint & in a low carbon
Goyal & Joshi (2011) in their study “A study of economy there will be lot of challenges and
Social & Ethical issues in Banking Industry” opportunities for the banks. Banks can take various
highlighted social & ethical issues such as Social green programs to reduce their own impact on the
Banking, ethical Banking, Green Banking, global environment. These includes:
Banking, Rural Banking & Agri banking etc, which
facilitate the achievement of sustainable 1. Finance in Green projects- Banks can go green
development of banking & finance. They by investing in eco-friendly projects or projects that
concluded that banks can act as a socially & do not harm the environment. Such projects
ethically oriented organization by disbursement of includes installing Solar energy plant, Bio-Gas,
loan only to those organization which have other renewable energy plants, bio- fertilizer plants,
environmental concerns. Effluent treatment plant etc. Before investing in
any projects, banks should take proper steps to
Dharwal & Agarwal (2011) in their study on assess its environmental or climatic risk.
“Green Banking: An Innovative Initiative for Environmental audits of the financed projects can
Sustainable Development” concluded as far as also be conducted by the banks in this regard.
green banking is concerned, Indian banks are far
behind their counterparts from developed countries. 2. Green Mortgages- Banks can offer special
If Indian banks desire to enter global markets, it is discount to those customers who provide
important that they recognize their environmental mortgages of land & buildings which are greener.
and social responsibilities. Survival of the banking This will induce use of more energy efficient
industry is inversely proportional to the level of material & building plans. Those building which
global warming. Therefore, for sustainable are designed & constructed with energy efficient
banking, Indian banks should adopt green banking items such as solar panels &improved insulation
as a business model without any further delay. should be given preference as a mortgage.

RESEARCH METHODOLOGY 3. Green fund-Banks can introduced the concept of

Green fund for the environmental friendly
This data has been collected from secondary customers for investing their funds in greener or
sources i.e., documents, websites, journals, environmental friendly projects.
research articles& other papers.
4. Green credit cards- Banks can offer Green Credit
GREEN BANKING cards to their customers which allow card holders
to accumulate rewards points that can be used to
Green Banking refers to a banking business in help offset global warming.
which all the banking activities focused on Socio-
Economic and environmental factors that helps in 5. Mobile Banking – Mobile banking is an
reducing external carbon emission and internal innovative way through which customers can check
carbon emission. balances, transfer funds or pay bills on mobile
phone that save the time & energy of the customers
Internal Carbon Emissions are generated by the and also reduced the need of the paper.
bank through the use of paper, electricity, lighting,
stationery, air conditioning & electronic 6. Energy conservation- Banks can take proper
equipments. In order to reduce this, banks can steps in order to save energy. For e.g.: Use of day
adopt Green banking practices such as Online light instead of electric bulb, use of energy saving
banking, use ATMs , Mobile banking, Credit & bulbs, Proper ventilation, use of solar energy or
Debit cards, Online transfer of funds, SMS renewable energy etc.
banking, Cash & cheque deposit machines , E-
statements, SMS alerts, e-mail correspondence, 7. Development of human capital – Banks can
electronic checks and more. develop skills and environmental consciousness
among its members by arranging several seminars
With an aim to reduce external carbon emission, & symposiums time to time. This will ultimately
banks should finance that projects which are help the staff members to become habitual to the
considered to be environmental friendly or green banking activities.
pollution reduction projects. Priority in lending
should be given to those industries which have 8. Online Banking services- Banks can provide
already become green & those which are making online services like online bill payment, online
serious attempts to grow green. transfer of funds, online statements etc. benefits of
online banking include less paper work , less mail
and less driving to branch offices which all have a
positive impact on the environment. Through
online banking, banks can increase their efficiency

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Green Banking: An Overview

& profitability and can also reduce their own cost reduced margins, lower interest rates &
that results from paper overload & bulk mailing zero processing fee.
fees.  In order to promote Paperless Green
Banking for deposit, withdrawal &
9. Charge on offline payments- Several banks remittance SBI has started „Green Channel
levied a service charge on those customers who Counter‟ on 1st July 2010. In this
make credit card dues/ by cash or cheque in order customer need not fill up any pay in slips
to reduce paper based payment transactions& to or draw cheques for depositing or
encourage the electronic mode. HDFC Bank with withdrawing money from their accounts,
5.9 million credit card holders charges 100 for cash saving paper and thereby contributing to
payments of credit card dues. the concept of green banking.
10. Minimize Plastic Consumption- Banks can Punjab National Bank
provide various documents such as FD receipts,
loan agreement in eco friendly pouches instead of Green initiatives taken by bank included promotion
plastic pouches to their customers. This will helps of rain water harvesting, reduced use of paper by
in reducing plastic consumption of banks. using e mail for inter office communications,
reduced power consumption through various
11. Reduce Air Pollution- By providing common energy conservation measures & conducting tree
transport for group of officials posted at one office, plantation drives.
carbon emission can be reduced to a great extent.
 Conducting electricity audit of offices as
12. Organize Environmental Campaigns- As a an energy conservation initiative.
part of their CSR activities, Banks should organize  Emphasizing on green buildings
environmental campaigns such as tree plantations,
 Adopting simple green practices such as
pollution check ups etc.
energy efficient lights, printing on both
13. Solar Energy- Banks can save energy sides of paper, purchasing composite fax
consumption by establishing solar panels. For e.g. machines, immediate repair of water
IndusInd Bank has introduced solar powered leakage etc.
ATMs under „Human aur Hariyali‟ Campaign. The  In 2010-2011 Bank sanctioned a wind
bank expects to save 1980 KWh of energy energy projects with aggregate limit of Rs.
annually. 185.81 crore.
 Guideline for providing finance to units
14. Encouragement to clients- Banks can producing clean energy such as solar
encouraged to their clients and business houses to energy, wing energy & hydel energy on
comply with the environmental regulations & merits of each case which helps in
undertake resource efficient & environment containing Green House Gases emission
friendly activities. Banks can also introduce leading to clean environment.
elaborate programmes to educate clients.
ICICI Bank
GREEN BANKING INITIATIVES OF BAKNS
IN INDIA  ICICI Bank is offering 50% concession on
processing fee on car models to those
In India banks are now realizing the importance of customers who use more environmental
going green and taking up various green banking friendly vehicle.
initiatives.  If customer purchases home in
„Leadership in Energy & Environmental
State Bank of India Design‟ then they have to pay reduced
SBI as a part of its Green banking policy has set up processing fee under ICICI Home
Wind mills to generate 15 MW of power in Finance.
Tamilnadu, Maharashtra & Gujarat for its own  ICICI Bank is working on & looking
consumption. The mill in Tamilnadu would forward to partnership with National &
generate 4.5 MW of power, 9 MW in Maharashtra International Green organization & NGOs.
and 1.5 MW in Gujarat. This bank has generated  Communication on Online bill pay, Online
Green power as a direct substitute to polluting funds transfer & subscribing to e –
Thermal power & implement the renewable energy statements in order to migrate the
project for captive use. customers to „paperless and commute
free‟ banking.
 In order to support environmental friendly
residential project, SBI has introduced a Standard Chartered Bank
new scheme „Green Home Loan Scheme‟ Standard Chartered Bank always try to minimize
that will offer various concessions- their direct impact on the environment and set
stringent targets for reducing consumption of

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Green Banking: An Overview

energy, air travel, water & paper. Their green is supported by two Solar panels
banking initiatives include: containing a controller that feeds the
system as well as charge the batteries.
 Use of LED signboards. This system save 1980 KW hrs every year
 Construction of green terraces in office and electricity cost by Rs 20000 a year.
buildings.  Other green initiatives taken by the bank
 “Green Zone” paper recycling initiative to include: thin computing, e-archiving, e-
recycle 100 tons of paper annually. learning, e waste management, Paperless
 Water conservation efforts like the fax, energy conservation, CNG cars etc.
waterless urinals& auto closure taps.
 Use of Wind energy that reduces Carbon IDBI Bank
footprint by 134tons/year and a 12%
IDBI Bank took a step towards green initiative in
reduction in power cost.
corporate governance in which the bank send all
 Launched an innovative new program
the documents relating to General meeting notices/
Statement for life- that helps redirect
other notices, Annual report etc. to their
paper saving to donate books to the girls
shareholders in electronic form.
enrolled in their Goal programme, when
customers sign up for E – Statements. IDBI Bank has an exclusive team working on
Clean Development Mechanism (CDM) advisory
Syndicate Bank
services. It also implemented a refinance scheme
Green Banking initiatives of syndicate bank for energy saving projects for Micro, Small and
include: Medium Enterprises.

 Bank has taken steps towards Central Bank Of India

implementation of “Green initiative in Central Bank Of India launched “Go Green”
Corporate Governance” by allowing Campaign for its customers with a purpose to
paperless compliances through electronic promote Green Banking which is Paperless &
mode. Queue less Banking and also promotes use of
 Bank is actively encouraging transactions recyclable products for banks stationery using
through alternative channel to reduce the TYVEK materials. In this, Customers is motivated
usage of paper based payment to opt for E statements, use internet banking & use
instruments. E- Voucher machine for transactions.
 Through the e-lounge facilities, internet
banking & ATMs bank is encouraging CONCLUSION
banking transactions through E -Mode
thus paving way for a greater role towards Banks and Financial institutions play a major role
green initiatives. to make our planet a better place to live in. Green
bank and environmentally responsible banks do not
Yes Bank only improve their own standards but also affects
socially responsible behaviour of other business.
Yes Bank is a first Indian signatory to the carbon Green banking helps in saving the energy and
disclosure project and has documented its carbon water consumption & also appraise banks in the
footprint. It is also the first Indian Bank from the eyes of environment supporting customers. Today
Private sector to become signatory to UNEP many Indian banks are making efforts to „Go
statements by financial institutions on the Green‟ through offering various green products &
environment & sustainable development. Yes bank services to their customers and taking initiatives in
also advocated a proactive response to climate their day to day business operations for the
change from its peers in the banking community, environmental concerns. These include- Online
industries and society as well. banking , mobile banking, ATMs, Electronic fund
transfers, Green mortgages , Green credit card , use
IndusInd Bank
of solar and wind energy, recycling of paper, Green
IndusInd bank is a private sector bank which has buildings etc. But still there is a long way to go.
taken green banking initiatives with a goal to Indian banks need to set their near term and long
promote sustainable business practices to offset the term green goals, develop their green strategies and
effects of climate change. execute their greening activities in a phased
manner.
 The bank has installed a Solar Powered
Automated Teller Machines (ATM) which

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Green Banking: An Overview

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