Which initiative is the Reserve Bank of India launching to address climate change risks and sustainable finance?

The correct answer is On Tap Cohort.

In News

• The Reserve Bank of India (RBI) is launching a dedicated 'On Tap' cohort on climate change risks and sustainable finance.
• This initiative will be part of RBI’s Regulatory Sandbox to encourage financial innovations in green finance.

Key Points

• The 'On Tap' cohort aims to support capacity building, ecosystem development, and financing for sustainable projects.
• RBI is also planning to conduct a special ‘Greenathon’ focused on climate change and related aspects.
• Green finance projects face higher credit risks due to the use of emerging green technologies with limited operational track records.
• Priority sector lending in India already supports credit flow to renewable energy and sustainable projects.

Additional Information

• Regulatory Sandbox
  • An initiative by RBI to allow fintech startups and financial institutions to test innovative financial solutions under regulatory supervision.
  • Encourages development in digital payments, lending, and sustainable finance.
• Green Finance Challenges
  • Higher credit risk due to new technologies with limited performance history.
  • Need for technical know-how among financial institutions for risk assessment in green projects.
• Climate Change Risks in Finance
  • Impacts financial risks including credit risk, market risk, and operational risk.
  • Requires coordination among regulators, financial institutions, and government agencies.
• RBI's Role in Sustainable Finance
  • Facilitates policy and regulatory support for green finance initiatives.
  • Aims to create a stable financial system resilient to climate-related risks.