Integration of sustainability in banking sector Online published on 14 December, 2011. Abstract Global warming and climate change are particularly important in the context of sustainable development, especially for developing countries, which tend to be ill-equipped for such changes. According to recent studies on climate change, the majority of Asian companies are “largely oblivious” to the risks posed by climate change issues to their business models and the environment. The contribution of financial institutions including banks to sustainable development is paramount, considering the crucial role they play in financing the economic and developmental activities of the world. In this context, the urgency for banks to act as responsible corporate citizens in the society, especially in a developing country like ours, need be hardly overemphasized. Their activities should reflect their concern for human rights and environment. Reserve Bank of India feels that, there is general lack of adequate awareness on the issue in India. In this context, the need for sustainable developmental efforts by financial institutions in India assumes urgency and banks, in particular, can help contribute to this effort by playing a meaningful role. RBI in its notification dated 20th November 2007 has advised banks to take note of the issues raised and consider using the same to put in place a suitable and appropriate plan of action towards helping the cause of sustainable development, with the approval of their Boards. This section focuses on the role of commercial and investment banks in sustainable development. It examines recent trends in banking and sustainable development, innovative banking practices, and events that have shaped the role of the banking sector in sustainable development. The banks recognize that their role as financiers affords them significant opportunities to promote responsible environmental stewardship and socially responsible development, and thereby minimize their loan risk. The banks are using environmental and social screens developed by the World Bank and the International Finance Corporation for several dozen industry sectors. In this paper an effort is made to suggest modified procedure for commercial lending by Indian commercial banks to enable them to safeguard their own interests and also help in promoting environmental protection by the industry. Paper explained the need for environmental protection, need for sensitization of branch managers and requested bankers to be aware of funding environment-related projects. Commercial banks are not the direct generators and dischargers of environmental pollution, but why they should be responsible for lenders’ behaviors? In the threats of environmental crisis to human survival and development, to prevent the deterioration of the environment, it has been the focus to solve the environmental pollutions, and the expansion of the environmental legal liability principle and the extension of the undertaking range are Effective measures. Top Keywords banking system, role of banks in economy, banking degree of the economy. Top |