Managing Climate Risk in Indian Banking: Regulatory Shifts and Institutional Responses

Title

Managing Climate Risk in Indian Banking: Regulatory Shifts and Institutional Responses

Creator

Malhotra, Shikha; Mohanty, Priyakrushna; George, Babu

Description

Climate change is widely discussed as a prominent risk aspect which can pose financial risks to financial entities. The risks may range from physical risks and transition risks and impact can be evident across all the global economies. In India, the banking sector is the most important component of its financial system and is entrusted with managing various financial risks and mobilizing funds for sustainable development. The timely guidance of the Reserve Bank of India (the apex regulatory body) has made Indian Banks factor in climate risk factor into their internal control, risk assessment and disclosure processes. This chapter examines the changing role of risk management practices in Indian Banking Sector, where climate change also has a key role now. This study also focusses on new policies, practices and response of individual banks. The large banks of India have set a path of climate risk management by starting a separate ESG and Climate Finance Unit, laying down an ESG financing framework, and adding climate scenario analysis in its risk assessment. Banks such as HDFC Bank, Yes Bank, Kotak Mahindra Bank, and Federal Bank have also advanced through financed emissions reporting, net-zero commitments, climate stress tests, and coal policy exclusions. In spite of these steps, the overall preparedness of the Indian banking sector is still limited, with most institutions still in the process of defining climate risk strategies. The key issues are availability of data, absence of uniform ESG metrics, and dearth of internal expertise. Institutional responses are compared and explained in this chapter and policy gaps that must be addressed in the short run. Through the presentation of regulatory changes and best practices, it emphasizes the importance of Indian banks moving away from reaction-driven risk management to proactive climate leadership and thus contributing to Indias larger environmental and economic objectives. The Author(s), under exclusive license to Springer Nature Switzerland AG 2026.

Source

World Sustainability Series;Volume;Part F1959;pp.393-413

Date

01-01-2026

Publisher

Springer Science and Business Media Deutschland GmbH

Subject

BASEL; Climate risk; Indian Bank; Indian financial system; TCFD

Coverage

Malhotra S., School of Business and Management, Christ University, Bengaluru, India; Mohanty P., School of Business and Management, Christ University, Bengaluru, India; George B., Alcorn State University, Lorman, MS, United States

Rights

Restricted Access; Hardcopy may be available in the library

Relation

ISSN: 21997373;

Format

online

Language

English

Type

Book chapter

Identifier

https://doi.org/10.1007/978-3-032-19076-5_20

https://www.scopus.com/pages/publications/105040042182?origin=resultslist