Reserve Bank of India: Strengthening Climate and Financial Resilience Through Basel Principles
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Key Highlights:
- Challenges for India mean climate risks must be managed at both micro and macro levels.
- Recommendations to RBI include adapting global templates to Indian context and transition plan guidance
- Basel Principles (2022): Provide 18 global guidelines for managing climate-related financial risks, mostly microprudential in focus.
The India Initiative on Climate Risk and Sustainable Finance (IICRSF), in collaboration with the Climate Bonds Initiative, ODI Global, and auctusESG, today released a landmark report titled Macroprudential and Microprudential Perspectives on Implementing the Basel Principles on Climate-Related Financial Risks. The report provides key recommendations for the Reserve Bank of India (RBI) as it prepares to integrate global standards into the national financial system.
The Basel Committee on Banking Supervision (BCBS) principles, first introduced in 2022, highlight how banks should manage climate-related risks within governance, strategy, and risk management frameworks. While these principles have a primarily microprudential focus, the report stresses the need for macroprudential considerations ,particularly vital for India’s financial system, where systemic vulnerabilities could amplify climate-related shocks.
The report concludes that weaving together macroprudential and microprudential approaches will be essential for safeguarding India’s financial stability and mobilising the necessary finance for a sustainable and climate-resilient future.
