The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Climate Finance and Management of Climate Change Risks) Directions, 2025 to strengthen banks’ capacity to assess, manage, and disclose climate-related financial risks while promoting credible climate finance. These Directions apply to all commercial banks except SFBs, PBs and LABs, and introduce regulatory standards for green deposits, green finance, prevention of greenwashing, and climate-risk integration into governance frameworks. Key definitions include green deposits, green finance, green activities/projects, and greenwashing.
These Directions require bank Boards to approve comprehensive policies on green deposits and a detailed Financing Framework addressing eligible green activities, project evaluation and selection, monitoring, temporary allocation of unutilised funds, impact assessment, third-party verification/assurance, and mandatory disclosures. Green deposits must be INR-denominated, follow existing deposit-rate norms, be offered as cumulative or non-cumulative deposits, and adhere to rules on maturity, premature withdrawal, and overdraft facilities. Proceeds may be allocated only to eligible green projects and cannot be raised retrospectively for already-financed activities.
The framework enhances depositor protection and transparency through reporting requirements, Board-level reviews, annual impact assessments, mandatory publication of policies, external assurance, and classification guidance aligned with PSL norms. It also allows investment of proceeds in Sovereign Green Bonds and mandates that temporary deployment be restricted to Level-1 HQLA for up to one year. These Directions supersede earlier instructions to the extent inconsistent.
[Notification No. RBI/DOR/2025-26/172]
