THE ROLE OF GREEN BANKS IN INDIA

ABSTRACT

P.Suraj* P.M.Lohith**

One of the major economic agents influencing overall industrial activity and economic growth is the financial institutions such as banking sector. Further, environmental impact might affect the quality of assets and also rate of return of banks in the long-run. Thus the banks should go green and play a pro-active role to take environmental and ecological aspects as part of their lending principle, which would force industries to go for mandated investment for environmental management, use of appropriate technologies and management systems. Therefore, we suggest possible policy measures and initiative to promote green banking in India. Green banking is like a
normal bank, which considers all the social and environmental factors, it is also called as a ethical bank. Ethical banks have started with the aim of protecting the environment. These banks are like a normal bank which aims to protect the environment and it is controlled by same authorities as what a traditional banks do. An ethical bank, also known as social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. This movement includes: ethical investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, boycotting, etc. Ethical banks are regulated by the same authorities as traditional banks and have to abide by the same rules. While there are differences between ethical banks, they do share a common set of principles, the most prominent being transparency and social and/or environmental aim of the projects they finance. Ethical banks sometimes work with narrower profit margins than traditional ones, and therefore they may have few offices and operate mostly by phone, Internet, or mail.

*P.Suraj, I B.com, Sri Krishna Arts and Science, Coimbatore. **P.M.Lohith, I B.com, Sri Krishna Arts and Science, Coimbatore.