Climate disclosure for banks and NBFCs (RBI)

A bank's own offices and branches emit little. Its climate exposure sits in what it lends to and invests in: power plants, steel mills, cement kilns, real estate, farms and vehicles. If climate policy or physical damage hurts those borrowers, the bank's loans become riskier.

That is why regulators treat climate as a financial risk for lenders, not just an environmental issue. RBI has moved step by step: a discussion paper, a framework for green deposits, a draft disclosure framework and, in November 2025, consolidated Directions on climate finance.

As of this review, RBI's framework for mandatory public disclosure of climate-related financial risks was still in draft. Analysts therefore have to rely on BRSRs, annual reports and voluntary climate reports to judge a lender's exposure.

RBI's steps so far

• 2022: a discussion paper on climate risk and sustainable finance
• 2023: a framework for green deposits at banks and deposit-taking NBFCs
• February 2024: a draft disclosure framework on climate-related financial risks
• 28 November 2025: Directions on climate finance and the management of climate change risks, issued separately for commercial banks, small finance banks and NBFCs

The February 2024 draft disclosure framework

• Who: scheduled commercial banks (other than local area banks, payments banks and regional rural banks), the larger urban co-operative banks, all-India financial institutions, and top and upper layer NBFCs
• Structure: the four TCFD pillars of governance, strategy, risk management, and metrics and targets
• Glide path in the draft: governance, strategy and risk management disclosures first, with metrics and targets, including emissions, a couple of years later
• Status: not finalised at the time of this review. Press reports in July 2025 said RBI was in the final stages, with voluntary disclosures possible from FY 2026-27 and mandatory ones later.

The November 2025 Directions (commercial banks)

These Directions mainly set rules for green deposits and the financing of green activities:

• A board-approved green deposit policy and financing framework, published on the bank's website with an external reviewer's opinion
• Green deposit money must go only to eligible green activities, such as renewable energy, energy efficiency, clean transport, climate adaptation, water and waste management, green buildings and biodiversity conservation
• Excluded activities include fossil fuel projects, nuclear power, landfill projects, direct waste incineration and hydropower plants above 25 MW
• Money not yet allocated may be kept only in the highest-quality liquid assets for up to a year
• Yearly third-party verification and impact assessment, with reports published
• An interim list of eligible activities applies until India's official green taxonomy is finalised

Current disclosures by banks

• BRSR: listed banks file BRSRs, but these cover mostly the bank's own operations
• Voluntary climate reports: some large banks publish TCFD-style reports and estimates of financed emissions, often using the PCAF method
• Green deposit and green finance reports: under the 2025 Directions