Green Banking for Sustainable Development – A Case Study of Small Finance Banks in India

Sustainable development has been the primary goal of countries worldwide, leading to the adoption of various environmentally friendly business practices. One of these practices is green banking, which positions the banking sector as a key player in preserving the natural environment. In 2023, the Reserve Bank of India issued its first green deposit directive, but Indian commercial banks had already been taking green measures to fulfil their ESG (Environmental, Social, and Governance) commitments. However, there is a lack of research on how different small finance banks in India have adopted green banking, which has created the need for this study. This preliminary research scrutinises the sustainability initiatives of three major small finance banks (SFBs) of India, viz., AU Small Finance Bank, Equitas Small Finance Bank, and Ujjivan Small Finance Bank. These SFBs have been analysed based on various parameters, including energy management, digital banking innovations, green lending, waste management, and greenhouse gas (GHG) emissions, etc. The study's findings reveal that AU Small Finance Bank was not only the first to launch the Planet First – AU Green Fixed Deposit, but also the first to develop a Climate-Resilient Framework. Equitas Small Finance Bank leverages digital transformation and resource optimisation by adopting paperless operations and energy-saving practices.