Bid to promote green funding: Centre reviews proposals to promote transition finance
transition finance, aimed at helping high carbon-emitting industries fund their shift towards decarbonisation at lower interest rates.
One of the suggestions made by stakeholders, including banks, is to create a specific fund set up by state-run financial institutions for lending and refinance to smaller and emerging companies, said people aware of the developments.
«The proposed fund structure aims to help smaller companies scale up green operations and secure lower-cost credit, tied to meeting specific carbon emissions reduction targets,» said an official, who did not wish to be identified, adding that it would be easier to monitor smaller firms to ensure that they are following norms and not greenwashing.
Greenwashing refers to firms falsely claiming that they are reducing polluting emissions.
The fund can be set up by firms such as IIFCL and IREDA, and developmental financial institution NaBFID, the official said, adding, «This is also being discussed with sectoral regulators like the Reserve Bank of India (RBI) and market regulator, Securities and Exchange Board of India.» «More clarity will emerge when the sector definitions are in place, making it easier for foreign investors to participate,» said another official.
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