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The RBI guidelines on loans and advances provides a framework of
rules, regulations, and instructions issued to scheduled commercial
banks on statutory and other restrictions on loans and advances.
Commercial banks should implement these instructions and adopt
adequate safeguards in order to ensure that the banking activities
undertaken by them are run on sound, prudent, and profitable
lines(RBI 2014). The restrictions pertain to the following:
• Statutory restrictions
• Regulatory restrictions
• Restrictions on other loans and advances
• Transfer of borrowal accounts from one bank to another
• Guidelines on Fair Practices Code for lenders
• Guidelines on recovery agents engaged by banks
RBI guidelines with respect to loans and advances, non-performing
assets, interest payments, prudential norms, capital adequacy, and
know your customer (KYC) norms are very well-structured and set
according to international standards. RBI revised its priority sector
lending norms in April 2015 and notably accorded priority sector
lending status to renewable energy (RBI 2015). Banks can now provide
loans up to INR 15 crore (approx. USD 2.5 million)to borrowers for
purposes like solar-based power generators, biomass-based power
generators, wind mills, micro-hydel plants, and for non-conventional
energy-based public utilities viz.street lighting systems and remote
village electrification. For individual households, the loan limit will
be INR 10 lakh (approx. USD 0.016 million) per borrower. However,
there is a lack of a mechanism that would make the banks invest more
to support a green and low carbon economy. There is absence of green
credit guidelines or guidelines on similar lines in India that prescribes
banking institutions to establish and constantly improve the policies,
systems, and processes for environmental and social risk management,
and identify the directions and priority areas for green credit support.
Recently banks and financial institutions in India have submitted
Green Energy Financing Commitments for financing upto 2021–22
in the recently held RE-INVEST 2015. The submissions amount to a
total of INR 352,640 crore (approx. USD 58.8 billion) as depicted in the
Table 2.3.
In the banking sector, there have been several innovations in
traditional banking around the world. The Republic of Korea, for
example, has designed traditional financing instruments targeted at
both individuals and companies. Such innovations can be seen as a
254 Low Carbon Development in China and India
rules, regulations, and instructions issued to scheduled commercial
banks on statutory and other restrictions on loans and advances.
Commercial banks should implement these instructions and adopt
adequate safeguards in order to ensure that the banking activities
undertaken by them are run on sound, prudent, and profitable
lines(RBI 2014). The restrictions pertain to the following:
• Statutory restrictions
• Regulatory restrictions
• Restrictions on other loans and advances
• Transfer of borrowal accounts from one bank to another
• Guidelines on Fair Practices Code for lenders
• Guidelines on recovery agents engaged by banks
RBI guidelines with respect to loans and advances, non-performing
assets, interest payments, prudential norms, capital adequacy, and
know your customer (KYC) norms are very well-structured and set
according to international standards. RBI revised its priority sector
lending norms in April 2015 and notably accorded priority sector
lending status to renewable energy (RBI 2015). Banks can now provide
loans up to INR 15 crore (approx. USD 2.5 million)to borrowers for
purposes like solar-based power generators, biomass-based power
generators, wind mills, micro-hydel plants, and for non-conventional
energy-based public utilities viz.street lighting systems and remote
village electrification. For individual households, the loan limit will
be INR 10 lakh (approx. USD 0.016 million) per borrower. However,
there is a lack of a mechanism that would make the banks invest more
to support a green and low carbon economy. There is absence of green
credit guidelines or guidelines on similar lines in India that prescribes
banking institutions to establish and constantly improve the policies,
systems, and processes for environmental and social risk management,
and identify the directions and priority areas for green credit support.
Recently banks and financial institutions in India have submitted
Green Energy Financing Commitments for financing upto 2021–22
in the recently held RE-INVEST 2015. The submissions amount to a
total of INR 352,640 crore (approx. USD 58.8 billion) as depicted in the
Table 2.3.
In the banking sector, there have been several innovations in
traditional banking around the world. The Republic of Korea, for
example, has designed traditional financing instruments targeted at
both individuals and companies. Such innovations can be seen as a
254 Low Carbon Development in China and India
