Sustainable Banking in India: An Interpretive Structural Modelling Approach

Sustainable Banking in India: An Interpretive Structural Modelling Approach

Niraj Kumar Singh, Naman Verma

Under the guidance of Dr. Mohd. Shamshad

School of Finance & Commerce, GALGOTIAS UNIVERSITY

Chapter-I

1.1-Introduction:
Sustainable banking has emerged as a critical imperative in the global financial landscape, reflecting a paradigm shift towards integrating environmental, social, and governance (ESG) considerations into banking practices. In the context of India, a rapidly developing economy with unique environmental and social challenges, the adoption of sustainable banking principles is gaining traction as banks recognize their role in fostering inclusive growth while addressing pressing sustainability issues.

India stands at a crossroads, balancing the pursuit of economic development with the imperative of environmental preservation and social equity. With a population exceeding 1.3 billion and a burgeoning middle class, the country's demand for financial services is growing exponentially. However, this growth comes with significant environmental pressures, including pollution, resource depletion, and climate change impacts, as well as social challenges such as poverty, inequality, and inadequate access to basic services.

Against this backdrop, the banking sector in India is increasingly embracing sustainability as a guiding principle to navigate these complex dynamics. Sustainable banking in India entails not only managing financial risks and returns but also understanding and addressing the broader environmental and social impacts of banking activities. This encompasses a range of strategies and initiatives, including promoting green finance, fostering financial inclusion, engaging in corporate social responsibility (CSR), and complying with regulatory frameworks that promote sustainable development.

The transition towards sustainable banking in India is driven by various factors, including changing consumer preferences, evolving regulatory expectations, investor demands for ESG integration, and growing awareness of climate and social risks. Moreover, global initiatives such as the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement on climate change provide a framework for aligning banking activities with broader sustainability objectives.

In this context, it is essential to examine the opportunities and challenges associated with sustainable banking in India, as well as the strategies and best practices that can facilitate its widespread adoption. By fostering financial innovation, promoting responsible lending and investment practices, and catalyzing positive social and environmental outcomes, sustainable banking has the potential to unlock new pathways for inclusive and sustainable development in India.