RBI Deputy-Governor Urges Banks To Prepare For Climate-Linked Financial Risks

During the 10th SBI Banking and Economic Conclave, RBI Deputy Governor Swaminathan J. emphasised the necessity for banks to confront climate-related financial risks while urging them to reduce reliance on bulk deposits.

Addressing the audience, the deputy governor stressed the undeniable significance of climate change and its associated risks, stating that overlooking these factors is not an option. He highlighted India's susceptibility to climate change due to its geographical, environmental and economic characteristics.

Furthermore, he underscored the impact of changing monsoon patterns and temperature fluctuations on crop production, signaling the direct consequences of climate shifts on the economy.

Swaminathan J. expressed concerns about climate-related financial risks, noting their dual impact on both micro and macro-prudential aspects. He highlighted the escalating importance of addressing climate change risks, mentioning their increasing threat to financial stability in both advanced and emerging economies. Consequently, he emphasised the urgent need for an effective framework to identify, evaluate and manage these risks.