Green Bank 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 known as ethical bank or sustainable bank. Their purpose is to perform banking activities but with an additional plan towards taking care of earth’s ecology, environment, and natural resources including biodiversity.

1. Green Banking in India: A Commitment towards the Global Initiatives
G.REKA
Assistant professor, Department of Commerce,
Jamal Mohamed College,
Tiruchirappalli –20.
ABSTRACT
Climate change is the most complicated issue the world is facing. Across the globe there have
been continuous endeavors to measure and mitigate the risk of climate change caused by human
activity. In the environment friendly society “Go Green” mantra has become relevant in each and
every aspect of business. The banks too are adopting this go green mantra to contribute to the cause of
environment protection. Indian banks also endorse this new form of banking and have taken some
crucial steps in this regard. Green Banking means ensuring environment friendly practices in banking
sector and thereby reducing internal and external carbon footprints. The concept of green banking
helps to create cleaner and greener future as Green Banking has direct impact on the environment.
This paper explores how green banking benefits the environment, consumers etc. It further discusses
its evolution of green banking in India.
KEYWORDS: Green Banking, Environment, Climate Change, online banking, Carbon footprints.
INTRODUCTION
Environmentalism is a broad philosophy and social movement regarding concerns for
environmental conservation and improvement of the state of the environment. Environmentalism and
environmental concerns are often represented by the color ‘green’. Global warming, also called as
“Green House Effect” is a global issue that calls for a global response. The warming effect of certain
man-made gas emission such as carbon-dioxide, methane, nitrous oxide and hydro-fluoro carbon is
found responsible for distortion in climate changes. The rapid change in climate will probably be too
great to allow many eco systems to suitably adapt, since the changes have direct impact on bio
diversity, agriculture, forestry, dry land, water resources and human health. However, there is general
lack of adequate awareness on the above issues and hence there is urgent need to promote certain
urgent measures for sustainable development and corporate social responsibility.
OBJECTIVES OF THE STUDY
The main objectives of the study are as follows
 To know about green banking and its associated advantages.

2.  To suggest ways to promote green banking in India.
 To create awareness on the new concept called Green Banking and its benefits to the society.
RESEARCH METHODOLOGY
Mainly secondary source of information collected from published data pertains to Green
Banking, its awareness, products. The secondary data were further collected from standard text books
of related topics, journals and internet.
REVIEW OF LITERATURE
Sudhalakshmi and Chinnadorai (2014) present the status of Indian Banks in respect of Green
Banking and state that though goes green mantra is essential for emerging economies like India but
significant efforts have not been taken.
Dharwal & Agarwal (2013) green banking is a key in mitigating the credit risk, legal risk and
reputation risk. The author had suggested some green banking strategies like carbon credit business,
green financial products, green mortgages, carbon footprint reduction (paperless banking, energy
consciousness, mass transportation system, green building), and social responsibility services towards
the society.
Bahl (2012) highlights the means of creating awareness about Green Banking to ensure sustainable
growth. Garrettt’s ranking technique is used to analyze the most significant strategies in respect of
Green Banking.
Ginovsky (2009) had emphasized that in order to implement ecologically friendly practices, banks
should launch new banking products which promotes the sustainable practices and also needs to
restructure their back office operations.
Stewart (2008) did the study on PNC Financial Services, Pittsburgh. PNC Financial services had many
green branches which were certified by the US Green building Council (USGBC) Leadership in
Energy and Environmental Design (LEED).
GREEN BANKING
Green is becoming a symbol of Eco consciousness in the world. According to Indian Banks
Association (IBA, 2014) “Green Bank 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 known as ethical bank or sustainable bank. Their purpose is to perform banking
activities but with an additional plan towards taking care of earth’s ecology, environment, and natural
resources including biodiversity.

3. CONCEPT OF GREEN BANKING
The concept of Green Banking emerged in 2009 with coming of the first Green Bank based in
Mt. Dora, Florida, United States. The Institute for Development and Research in Banking and
Technology established by RBI defines Green Banking as: ‘Green Banking is an umbrella term
referring to practices and guidelines that make banks sustainable in economic, environment, and social
dimensions. It aims to make banking processes and the use of IT and physical infrastructure as
efficient and effective as possible, with zero or minimal impact on the environment.’
Green banking is making technological improvements, operational improvements and changing
client habits in the banking sector. It means to promote environmental friendly practices and to reduce
the carbon footprint from banking operations. It is a smart and proactive way of thinking with a vision
of future sustainability. Banking activities are not physically related to the environment, but the
external impact of their customer activities is substantial. Banks should promote those products,
process and technology which substantially reduce the carbon footprint from the environment.
Green Banking therefore covers two aspects. The first one being judicious use of all resources,
energy and reducing carbon footprints and second being encouraging and financing only environment
friendly investment. So Green Banking is not only about making sustainable use of resources but also
about environment friendly dispensation of credit. A proper scrutiny of all projects that are financed in
terms of environment is another major element of Green Banking.
Considering the nature of banking processes and infrastructures, this report offers guidelines for
greening banking in two levels.
 Making day-to-day business operations, banking products and services greener by following
simple practices and making them environmentally friendly.
 Making IT infrastructure (including data center) and physical infrastructure (including
buildings) greener and taking initiatives so that a bank could itself generate electricity for its
own consumption.
WHY GREEN BANKING?
The reasons for moving towards green mantra in banking sector in this fast changing environment
Going green provides competitive advantage.
 Consumers are more interested in environment friendly goods and services.

4.  The wave of globalization has increased awareness of investors and they now opt for
environment friendly investment.
 Stricter government regulations are in place now.
 Government agencies demand a greater disclosure.
.
MAJOR AVENUES OF GREEN BANKING
As highlighted by Institute for Development and Research in Banking Technology established by
RBI the major avenues of Green Banking are:
 Green Process which means that each unit and activities should be environment friendly. Few
among these are paperless transaction, maintaining contacts with customer through online
means, offering banking products in a way to have minimal environmental impact.
 Green Products and Services like electronic banking, electronic paperless statements etc.
Green Strategies which means explaining the key stakeholders about environmental values, setting a
green policy and publicizing it etc.
GREEN BANKING PRODUCTS
(1) Green loans
(2) Green credit cards
(3) Green CDs
(4) Online banking
(5) Green saving accounts
(6) Mobile banking
Thus green banking helps to create effective solutions of a range of environmental problems and at the
same time identify opportunities that benefit the customers.
METHODS IN GREEN BANKING
 Go Online: Online banking is a developing concept; it helps in conservation of natural
resources. It saves paper, energy and expenditure of natural resources. It also helps customers
to save money by avoiding late payments and also save their time.
 Use of Green Checking Accounts: Customers can check their accounts on ATM. They can
avail services including online payment, debit cards and online statements.
 Use Green Loans for Home Improvements: The Ministry of Non-renewable Resource in association
with some nationalized and scheduled banks undertook an initiative to go green by paying low interest

5. loans to the customers who would like to buy solar equipments.
 Power Savings Equipments: Banks can directly contribute to controlling climate change and as an
initial step they intend to start a campaign to replace all fused GSL bulbs, in all owned premises offices
and residential. Banks can also make a feasibility study to make rain water harvesting mandatory in all
the Bank’s owned premises.
 Use of Green Credit Card: Some of banks use green credit cards; by using it the banks will
donate funds to an environment friendly non-profit organization.
 Saving of Paper: Banks should purchase recycled paper products with highest post- customer
waste content. This includes monthly statements, ATM receipts, annual reports, envelopes etc.
 Mobile Banking: By using it customer can check balances, transfer funds or pay bills from the
phone. It also helps to save time and energy of the customers.
 Direct Deposits: Most employers will give employees the option tom receive their paycheck
electronically. It saves time, saves paper and lots of paper work.
 Use of Solar and Wind Energy: Using solar and wind energy is one of the noble cause for
going green. State Bank of India (SBI) has become the first bank in the country to venture into
generation of green power by installing windmills for captive use.
 Online (Net) Banking: It means customers can perform most of their banking related functions
without visiting the banks personally. For this customer must possess an internet banking ID, a
password provided by the bank in which customer has an account. Online banking includes use
of credit cards, debit cards, online bill payment and electronic fund transfer.
BENEFITS OF GOING GREEN
Green banking offers the following benefits:
 Green banking avoids paper work and makes use of online transactions such as Internet
banking, SMS banking and ATM banking. Less paper work means less cutting of trees.
 Green ethical banks adopt environmental standards for lending which would benefit future
generations.
 Green banks gives more importance to environmental friendly factors like ecological gains thus
interest on loan is comparatively less.
 It reduces the expenditure of bank and branch by minimizing the use of paper work and
mailing fees.
 Free electronic bill payment services.

6.  Cash back will be credited to all new customers, opening “green accounts”.
 Saving of Energy and Time.
 Faster services to customer.
 Mitigate the credit risk, legal risk and reputation risk.
 Generate clean and hygienic environment.
CHALLENGES OF GREEN BANKING
Green banks while adopting green banking face following challenges:
 Diversification Problems: Green banks restrict their business transactions to those business
entities who qualify screening process done by green banks. With limited number of customers
they will have a smaller base to support them.
 Startup Face: Many banks in green business are very new and are in startup face, generally it
takes 3 to 4 years for a bank to start making money thus it does not help banks during
recession.
 Higher Operating Cost: Green banks require talented, experienced staff to provide proper
services to customers. Experienced loan officers are needed with additional experience in
dealing with green businesses and customers.
 Reputational Risk: If banks are involved in those projects which are damaging the
environment they are prone to loss of their reputations. There are also few cases where
environmental management system has resulted in cost saving, increase in bond value( Heim,
G et al, 2005)
 Credit Risk: Credit risks arise due to lending to those customers whose businesses are affected
by the cost of pollution, changes in environmental regulations and new requirements on
emissions levels. It is higher due to probability of customer default as a result of uncalculated
expenses for capital investment in production facilities, loss of market share and third party
claims.
FINDINGS
1. Basically Green banking avoids as much paper work as possible and rely on online/ electronic
transactions for processing so that we get green credit cards and green mortgages. Less paperwork
means less cutting of trees. It also involves creating awareness to banking business people about

7. environmental and social responsibility enabling them to do an environmental friendly business
practice.
2. Green Ethical banks adopt and implement environmental standards for lending, which is really a
proactive idea that would enable eco-friendly business practices which would benefit our future
generations.
3. When we are awarded with a loan, the interest of that loan is comparatively less with normal banks
because green banks give more importance to environmental friendly factors - ecological gains.
4. Natural resources conservation is also one of the underlying principles in a green bank while
assessing capital/operating loans to extracting/industrial business sector.
5. 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.
6. The value proposition for corporations to go green includes many of the same issues as that for
individual consumers but on a much large scope and with additional concerns. Corporations may share
a desire to reduce carbon footprint and enhance security by eliminating paper waste, but they are also
extremely concerned with eliminating or decreasing errors due to manual processing and with creating
a profitable bottom line.
SUGGESTIONS
Following are some of the suggestions that can be adopted by the banks to promote green banking in
India:
 Make customers more and more aware about green banking through their websites.
 Banks can introduce green funds for customers who would like to invest in environment
friendly projects.
 Banks may formulate innovative financial solutions to incorporate environmental perspective
 Making green banking as part of annual environment reports
 Training and development of relevant skills among bank employees
 Carbon footprint reduction by saving energy and paper.
 Carbon footprint reduction by offering transportation services for their employees.
 Providing environment friendly rewards to customers.
 By financing more and more environment-friendly projects

8.  Join hands in more and more environment preserving causes.
 Focus on greening IT infrastructure
CONCLUSIONS
This concept of “Green Banking” will be mutually beneficial to the banks, industries and the
economy. Not only “Green Banking” will ensure the greening of the industries but it will also facilitate
in improving the asset quality of the banks in future.
Green Banking has been boosting to improve the environment and promoting economic growth.
Banks believe that every small 'GREEN' step taken today would go a long way in building a greener
future and that each one of them can work towards to better global environment. There is a lot of scope
for all banks and they can not only save our earth but can transform the whole world towards energy
conscious. Banks must educate their customers about green banking and adopt all strategies to save
earth and build banks image.
In India there has not been much initiative in this regard by banks and financial institutions. They
are not as green as foreign banks. As initially, these commitments will cause a huge financial burden
for Indian banks. For effective adoption of green banking, the RBI and the Indian government should
play major role and formulate green policy guidelines and financial incentive.
REFERENCES:
 Vikas Nath1, Nitin Nayak2 & Ankit Goel (2014), Green Banking Practices – A
Review,International Journal Of Research In Business Management.
 Yadav, r., & pathak, g. S. (2013). Environmental sustainability through green banking: A study
on private and public sector banks in india. Oida international journal of Sustainable
development.
 Dharwal, M., & Agarwal, A. (2013). Green Banking: An Innovative Initiative for Sustainable
Development, Journal Of Research In Business Management.
 www.scribd.com
 www.greenbankreport.com
 www.coalitionforgreencapital.com