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Posted 01 Mar 2024

Updated 27 Mar 2024

2 min read

  • RBI has issued these guidelines in the exercise of the powers conferred by the Banking Regulation Act, of 1949.
  • Climate-related financial risks means the potential risks that may arise from climate change or from efforts to mitigate climate change, their related impacts, and economic and financial consequences.

 

  • Need of Disclosure
    • Climate-related risks are one of the emerging risks. 
    • Helping various stakeholders (like customers and depositors) understand the risks an organization faces.
    • Foster an early assessment of risks and opportunities and also facilitate market discipline.

 

  • Applicability:  to the following entities, collectively referred to as Regulated Entities(RE’s)
    • All Scheduled Commercial Banks (excluding Local Area Banks, Payments Banks, and Regional Rural Banks)
    • All Tier-IV Primary (Urban) Co-operative Banks.
    • All All-India Financial Institutions
    • Large Non-Banking Financial Companies.

 

  • RE’s will be required to make disclosures on four thematic areas (Pillars): 
GovernanceGovernance processes, controls, and procedures used by the RE’s to identify, climate-related financial risks and opportunities.
StrategyStrategy for managing climate-related financial risks and opportunities
Risk ManagementProcesses to identify, assess, prioritize, and monitor climate-related financial risks and opportunities
Metrics and TargetsPerformance concerning RE’s climate-related financial risks and opportunities
  • Tags :
  • RBI
  • Climate-related Financial Risks
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