Golden Research Thoughts

Volume 2, Issue. 7, Jan. 2013

ISSN:-2231-5063 ORIGINAL ARTICLE

Available online at www.aygrt.net

GRT
GREEN BANKING IN INDIA
S.G. KHAWASPATIL AND R.P. MORE Asst. Prof., Yashwant College, Nanded, Asst. Prof. Zeal Institute of Management and Computer Application Pune. Abstract: Sustainable enlargement can best be achieved by permitting markets to work within an appropriate framework of cost efficient regulations and economic instruments. One of the major economic agents influencing overall industrial activity and economic growth is the financial institutions such as banking sector. In a globalised economy, the industries and firms are vulnerable to stringent environmental policies, severe law suits or consumer boycotts. Since banking sector is one of the major stake holders in the Industrial sector, it can find itself faced with credit risk and liability risks. Further, environmental impact might affect the quality of assets and also rate of return of banks in the long-run. Thus the banks should go green and play a pro-active role to take environmental and ecological aspects as part of their lending principle, which would force industries to go for mandated investment for environmental management, use of appropriate technologies and management systems. This paper explores the importance of Green Banking, sites international experiences and highlights important lessons for sustainable banking and development in India. However, we find that there has not been much initiative in this regard by the banks and other financial institutions in India though they play an active role in India's emerging economy. Therefore, we suggest possible policy measures and initiative to promote green banking in India. KEYWORDS : Green Banking cost efficient, economic growth, ecological aspects. INTRODUCTION Americans are starting to turn to eco-friendly banking as a way to help reduce the carbon footprint from their normal banking activities. This movement away from branch and paper banking is being led by green banks that believe in social responsibility. Online banking is easy way for green banking. Benefits of online banking include less paperwork, less mail and less driving to branch offices, which all have a positive impact on the environment. Interestingly, online banking can also increase the efficiency and profitability of a bank. Banks reduce the cost from paper overload and bulk mailing fees as more customers use online banking. Green banking can also trim down the need for expensive branch banks and customer service representatives. So if a bank is not yet utilizing green banking, then bank will face over cost other than. Banks can do much more to help the environment than just promote online banking. A truly green bank will reduce their carbon footprint by building more efficient branches, implementing energy-efficient operational procedures, offering transportation services for their employees, promoting sustainable banking and increasing their lending in environment-sensitive industries. Banks can also support ecofriendly groups and raise money for local environment initiatives.
Title : GREEN BANKING IN INDIA .Source:Golden Research Thoughts [2231-5063] S.G. KHAWASPATIL AND R.P. MORE

yr:2013 vol:2 iss:7.

GREEN BANKING IN INDIA

LITERATURE REVIEW: Concepts Review: Green banking is like a normal bank, which considers all the social and environmental/ecological factors with an aim to protect the environment and conserve natural resources. It is also called as an ethical bank or a sustainable bank. They are controlled by the same authorities but with an additional agenda toward taking care of the Earth's environment/habitats/resources. Green Banking as a concept is a proactive and smart way of thinking with a vision for future sustainability of our only Spaceship Earth - as design science explorer Richard Buckminster Fuller called our Earth RESEARCH REVIEW: Green banking: Banks can achieve lasting growth in Germany by offering sustainable financial products A Roland Berger study shows that green banking offers significant potential for traditional financial institutions In Germany, three million bank customers now take advantage of green or social banking products six million customers expected by 2015 Investment volumes in Germany are growing by about 22% each year. A total investment volume of EUR 100 billion is expected by 2015 To benefit from the megatrend of sustainability, traditional banks must rethink their structures, partnerships and investment strategies Special banks and the food sector: role models with regard to sustainable products

The market for green banking has strong growth potential, especially in Germany. At present, three million bank customers are taking advantage of green or social banking products. This number could increase to six million by 2015, as a growing number of bank customers want to know more about how their money is invested. With average annual growth of about 5%, the investment volume for sustainable financial products is expected to reach EUR 100 billion by 2015. Low-risk savings products could be the main drivers of this growth. However, traditional banks have quite some catching up to do when it comes to such products. Above all, banks must gain the trust of their customers by ensuring that funds are invested in a transparent manner. Small specialist banks and the food sector have been pioneers in the area of sustainability, as shown in a new Roland Berger study. Entitled "Green banking: Significant growth potential for banks", the study is part of the think: act CONTENT series. "A growing number of consumers are opting for sustainable financial products when investing their money. For this reason, the banking sector should look to the food sector for guidance. The success of organic foods in recent years is a strong example of how companies can benefit from market growth with sustainable products," says Wolfgang Hach, Partner at Roland Berger Strategy Consultants. OBJECTIVES OF STUDY The main objectives of this study are to find out; Green banking evolution in India and its approach in Indian banks. Awareness of bank customer about green banking How green banking beneficial to consumers (Individual s corporate) GROWTH OF GREEN BANKING The most important themes of twenty first century are the Environmental protection and sustainable ecological balance and it become a important issue that must be considered by all functional areas including banking. Green banking involves environmental and social responsibility. This word is new in Indian banking and it appeared in 2009 when there were concern on environment conservation and it was realized that banks can play a big role in this movement. Green Banking encompasses a wide variety of banking services. The banks are providing finance to primary metallurgical industries, paper and pulp, pesticides / Insecticides, fertilizers, chemical / pharmaceuticals, textiles etc and bank may play a big role by
Golden Research Thoughts Volume 2 Issue 7 Jan 2013

GREEN BANKING IN INDIA

scrutiny of investment projects from the environmental angle Banks are now started to obtain NOC from respective state pollution control board. Many banks are promoting online banking services as a form of green banking. Benefits of online banking include less paperwork and less driving to branch offices by bank customers. Green banking also reduces the expenditure of bank and branch by minimizing the use of paper work and mailing fees. Thus green banking not only important for environmental point of view but also mitigate the credit risk, legal risk and reputation risk. Drivers & Trends of Green Product Development The demand for environmental products and services, particularly green financial products and Services, is on the rise in North America. Comparing this green evolution of North America's attitudes to those abroad, it becomes apparent why North America's financial institutions have been slower in offering green banking products and services. However, this comparison indicates the direction in which new product and service offerings are headed. Three overarching drivers and trends are behind the emergence and growth of green product and service demand: Environmental Knowledge & Media Coverage: The information age has enabled an unprecedented understanding of the severity, sources and implications of various environmental challenges. Higher levels of media coverage about these issues, along with multinational environmental campaigns and outreach initiatives have helped improve the general public's understanding of the issues. Environmental Awareness & Public Opinion: A relatively high degree of environmental awareness and government support for environmental sustainability in Europe has driven ever-growing consumer demand for eco-friendly products and services. Recent opinion polls, corporate initiatives, and shareholder actions suggest a similar environmental awakening is building momentum in North America. Environmental Regulation & Legislation: Regulatory actions, particularly those which provide price certainty in environmental markets and those that prohibit unsustainable practices, can significantly stimulate demand for green products and services among bank clients. In Europe, proactive governmental policy, such as the European CO2 Emissions Trading Scheme, German feed-in-tariffs for renewable energy and Dutch Green Funds, has helped trigger both demand for, and development of, greener consumer options. As environmental understanding and awareness grow in North America, along with the emergence of more stringent environmental regulation, so too will the demand for products and services aimed at fostering environmental sustainability. This demand will also expose new business opportunities, leading to a diverse array of products and services in many sectors. Organizations that have the foresight and capacity to tap into this desire by consumers to affect positive environmental change may experience benefits ranging from improved corporate image to increased growth and competitiveness in the marketplace. Given their intermediary role in the economy and far-reaching customer base, financial institutions will be well-positioned to benefit from the design and marketing of new green products and services, while furthering their contribution toward sustainable development Product of Green Banking Bank products and services can also reflect a green banking commitment. Green Deposits: Banks can offer higher rates on CDs, money market accounts, checking accounts and savings account if customers opt to conduct their banking activities online. Green Mortgages and Loans: A bank can offer green mortgage with better rates or terms for energy efficient houses. Some green mortgages allow home buyers to add as much as an additional 15 percent of the price of their house into loans for upgrades including energy-efficient windows, solar panels, geothermal heating or water heaters. The savings in monthly energy bills can offset the higher monthly mortgage payments and save money in the long run. The Energy Efficient Mortgage (EEM) is a type of HUD-approved green mortgage that will credit you for your home's energy efficiency in the mortgage itself. Many home improvements also qualify for the energy tax credit. Anyone undertaking an energy-saving house project, should shop around for a bank that
Golden Research Thoughts Volume 2 Issue 7 Jan 2013

GREEN BANKING IN INDIA

offers a special rate for a green mortgage or loan. Green Credit Cards: A green credit card allows cardholders to earn rewards or points which can be redeemed for contributions to eco-friendly charitable organizations. These cards offer an excellent incentive for consumers to use their green card for their expensive purchases. Imagine the millions of dollars that could be raised for worthwhile environmental groups if green credit cards really took off. Green Reward Checking Accounts: A bank product called reward checking accounts pays a bonus rate for customers who go green. Customers can earn higher checking account rates if they meet monthly requirements that might include receiving electronic statements, paying bills online or using a debit or check card. With this banking product higher rates and eco-friendly living go hand-in-hand.
This pursuit of sustainability also typically translates to other benefits including the following:
Access to capital market Reporting allows for enhanced performance profiting sought by lenders, business partner& customers. Investor Interest Sustainability reporting is important parameters to attract investor. Cost Saving Tracking the energy management practices of the company gives an opportunity for improvement which translates into reduced raw material cost, reduced energy cost.

T A N G I B L R

Benefit s

I N T A N G I B L R

Compatibility Position Consumer & stakeholders Demonstrating I Care Reflecting of corporate Improved consumer Relation Governance Indicate the superior Biz. Mgt. Improve the stakeholder value. Mitigate business risk. Brand Enhancing Responsible performance is vital to brand value & trust. Bring to limelight in a structured manner all initiative taken in all s ocial environmental & Economic front

CONCLUSION The study concludes that in-spite of a lot of opportunity in green banking, RBI notifications, Indian banks are far behind in the implementation of green banking only some of banks have initiated towards green banking. There is more scope for all banks and they can not only save our earth but can transform the whole world towards energy conscious. Banks must literate their customers about green banking and adopt all strategies to save earth and build banks image. REFERENCES: 1. Mukesh Kumar Verma, Green Banking: A Unique Corporate Social Responsibility Of Indian Banks, (2012) International Journal Of Research In Commerce & Management (Volume No. 3), Issue No. 1 2. Sahoo, Pravakar and Nayak, Bibhu Prasad, (2008), Working Paper submitted to Institute of Economic Growth, New Delhi. 3. Sharma, Nishi, CSR practices and CSR reporting in Indian Banking sector,(2010), International Journal of advanced economics and business management, Vol. 1, Issue 2, pp58-66 4. RBI Notification, (2007), CSR in Indian Banks 5. Websites of respective banks viewed on 01 Oct 2011. 6. http://greenbankreport.com. 7.www.ey.in.

Golden Research Thoughts Volume 2 Issue 7 Jan 2013