PSBs to focus on measuring climate-related risks

Indian public sector banks are planning to team up and assess climate risk assessment metrics as part of a bigger plan to keep growing and making profits. The finance ministry is going to conduct a review of the public sector banks later this month, considering a three-year plan, according to an unnamed government source quoted in The Economic Times.

This matches the global focus on dealing with climate change problems and making sure banks are strong enough while getting ready for future changes. These banks are being encouraged to think about things like the environment and society when they give out loans and to think about the risks that come with climate change.

India’s biggest bank, the State Bank of India (SBI), is already looking into what risks climate change might cause for its business. The three-year plan also wants these banks to work together more efficiently. The government wants them to keep up the good work they’ve been doing in the last few years and try new ways of doing business. Each bank will have its own review meeting.

The government is also asking the bigger banks to help the smaller ones by showing them the best ways to do things. These banks are starting to work together on different things, like sharing a computer system and a way to check the value of things used as collateral for loans in agriculture. The government also wants these banks to use big data, which means using a lot of information to make better decisions and improve how they do business. The Financial Stability Board, a global group that helps countries and central banks make finance rules, said in a report in July 2022 that climate change risks are becoming more serious and banks need to think about them, not just as a future problem but as something important right now.