Fostering Economic Growth through Sustainable Finance and Financial Inclusion – A Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India

Summary:

The document discusses the concept of sustainable finance and its connection to Priority Sector Lending (PSL) in India. The speaker, Shri V G Sekar, emphasizes the importance of sustainable finance in addressing climate change, social inequalities, and governance issues. He highlights the growing recognition of the need for sustainable development and the increasing awareness of the role of financial institutions in promoting sustainable practices.

The speaker notes that sustainable finance is a powerful tool to mitigate risks, drive positive change, and ensure long-term prosperity, and that it is becoming a key aspect of the financial sector's agenda. He also discusses the Reserve Bank of India's (RBI) initiatives to promote sustainable finance, including the establishment of the Sustainable Finance Group (SFG) and the release of a discussion paper on climate risk and sustainable finance.

Regarding PSL, the speaker notes that it plays a significant role in ensuring financial inclusion in India, and that it has evolved over the years to include key sectors such as agriculture, MSMEs, renewable energy, and social infrastructure. He highlights the importance of incorporating sustainability principles into PSL, citing examples of loans for renewable energy projects and agricultural practices.

The speaker concludes by emphasizing the critical role that banks can play in advancing the agenda of inclusive growth and sustainability, and encourages banks to go beyond mere compliance and to actively promote sustainable finance practices.