Climate change risk have started to impact financial system warns RBI Dy Gov
By : DC Correspondent
Update: 2024-12-05 05:42 GMT
The Reserve Bank of India (RBI) deputy governor M Rajeshwar Rao on Wednesday emphasized on the need to build capabilities to ensure correct assessment of these risks and put in place suitable adaptation and mitigation measures. Speaking at the International Conference, organised by the Institute of South Asian Studies (ISAS) at the National University of Singapore (NUS), in New Delhi Rao said that climate change risks have started to impact the financial system and are envisaged to pose systemic risks in the coming future. “The climate-specific vulnerabilities’ interplay with real economy and financial sector vulnerabilities can lead to financial stability risks.”
“In this context, it is essential to build capabilities to ensure correct assessment of these risks and put in place suitable adaptation and mitigation measures. Transparency and capacity building are going to be the key differentiators and we need to collectively move in this direction,” he added.
The central bank intends to address the gaps in climate data availability with the creation of the data repository namely, the Reserve Bank – Climate Risk Information System (RB-CRIS) in two parts. The first, a web-based directory, listing various data sources, (meteorological, geospatial, etc.) and a data portal comprising of datasets (processed data in standardised formats).
The world and India in specific require a considerable amount of funding to achieve the respective net zero targets. It is estimated that the funding requirement to achieve these targets ranges around USD 160 billion per year. He said climate change was a topic of heated debate, particularly about availability of adequate climate related finance, at the recently concluded Conference of Parties (COP) 29 in Baku, Azerbaijan. Though the agreement proposed to triple the climate finance for EMDEs from the previous goal of USD 100 billion to USD 300 billion annually by 2035, it fell short of EMDEs expectations. India had committed to the COP26, its Panchamrit goals (Nationally Determined Contributions (NDCs).
On issue of non-availability of bankable projects in the area of green and sustainable finance, Rao suggested creation of a green and sustainable asset repository that would showcase the use cases of technological innovations for the financial institutions.