Sustainable development is evolving as a new paradigm that avoids over exploits of natural environment for economic prosperity. It can be achieved by allowing markets to work within a framework of cost efficient regulations. One of the major economic agents that influence the industrial activity and economic growth are the financial institutions like the banking sector. The banking sector influences the economic development and economic growth as it is the major source of financing investment. Therefore, banks and financial institutions play a major role in protecting the environment by following certain environmental friendly projects and by adopting certain environmental friendly prducts.
Green banking means promoting environmental friendly practices and reducing carbon footprints with the help of banking activities. It is same as normal banking the only difference is that it helps in the protection of the environment and natural resources. It focuses on improving the operations and technology along with the protection of the environment. It is a way of conducting banking business along with the social and environmental impacts.
GREEN BANKING PRODUCTS:
· Green loans: giving loans to a project or business that is considered environmentally sustainable.
· Green credit cards: by using biodegradable credit card material or by promoting paperless banking, credit cards are going green.
· Green mortgages: it is a type of mortgage which provides money saving discounts or a bigger loans for making energy efficient improvements.
· Mobile banking and online banking: this new age banking includes less paperwork, less travelling expenses. The customers can avail the banking facilities from anywhere and anytime.
· Green saving accounts: in this banks make donations through the savings done by the customers. The more they save the more it is beneficial for the environment in form of contributions done by the banks.
METHODS IN GREEN BANKING:
i. GO ONLINE: Online banking is a developing concept including internet banking, mobile banking and helps in the conservation of natural resources. Through these banking activities banks save paper and energy and less expenditure on natural resources. The customers also save their money by avoiding late payments.
ii. USE OF GREEN CHECKING ACCOUNTS: Customers can avail services like online payment, debit card and online statements.
iii. USE OF GREEN CREDIT CARDS: By doing this the banks donate funds to an environmental friendly non-profit organisation.
iv. SAVING OF PAPER: Banks should purchase recycled paper products including ATM receipts, envelopes, monthly statements etc.
v. MOBILE BANKING: It helps in saving time and energy of the customers as they can check their balances, transfer funds or pay bills from the phone.
vi. DIRECT DEPOSITS: In this the customers gets an opportunity to pay cheques electronically as it saves time, paper.
vii. ONLINE BANKING: It means that the customer can perform its banking related activities without going to the bank. For this the customer must have an internet banking id, a password provided by the bank. It also includes credit card debit card, online bill payment and electronic fund transfer.
BENEFITS OF GOING GREEN
i. Green banking avoids paper work. Therefore less paperwork means less cutting of trees. Instead they make use of online transactions.
ii. Such banks adopt environmental standards which would benefit future generations.
iii. Green banks give more importance to environmental friendly factors like ecological gains therefore interest on such loan is comparatively less.
iv. There is free electronic bill payment services.
v. The customers who open green accounts are provided with cashbacks.
LIMITATIONS OF GOING GREEN
i. Difficult to operate: Sometimes it is difficult to navigate the banking sites.
ii. Security concerns: Even though the banking sites are highly encrypted, but with the developing technology anybody can get an access to the important information.
iii. Technical breakdown: sometimes the online banking websites may go down. This may occur due to heavy data interchange.
GREEN BANKING INITIATIVES ADOPTED BY INDIAN BANKS
The Government of India has issues guidelines to banks on green initiative. In order to implement the green initiative of the government all the banks were asked to :
· Increase the use of electronic payment.
· Increase the use of core banking solutions.
· Increase the use of video conferencing.
· Offer centralised payment system.
The various banks are as follows:
A) State Bank of India
· SBI is the first bank in India which in green banking and promoting green power projects.
· It has launched green banking policies and has set windmills in Tamil Nadu, Maharashtra, and Gujrat in generating power.
· SBI has also undertaken tree plantation during monsoons.
· It has also installed solar panels which makes it the largest installer of solar ATMs and also solar lamps in the rural areas.
· It has also installed rain water harvesting projects in a number of bank buildings.
· There are various other initiatives as well such as waste water treatment, construction of green buildings etc.
B) Bank of Baroda
· It has taken various green banking initiatives projects such as windmills, biomass and solar panel projects.
· The bank has undertaken energy efficient measures such as CFL and LED lighting, solar powered ups etc.
· It also promotes “Swatch Bharat” campaign.
· It has also undertaken tree plantation program.
· Bank of Baroda has signed a green pledge of the Ministry of New and Renewable Energy and has setup a butterfly park and also has eighteen types of medicinal plants.
C) Punjab National Bank
· PNB has undertaken various activities under green initiatives such as using of solar powered ATMs , passbook updation machine, Cheque Deposit Machine and using CFL lamps and also set up green lobby at various branches. It has also launched green e-vigilance.
· Banks also give credit appraisal preference to environment friendly projects like wind mills and solar power projects.
· It has also taken various activities through CSR initiatives like Van Mahotsav.
· It has also participated in clean Delhi drives so as to keep the city clean.
D) ICICI Bank
· ICICI has started a “go green” initiative which includes green communication with customers, green products etc.
· To reduce carbon footprint the bank has provided various services like mobile banking, interactive voice response which in convenient – Bank has provided a variety of services under one umbrella and gives for the customers.
· Bank has set up fully electronic branches for the customers.
· It provides home finances and vehicle finance as they encourage the customers to use environmental friendly vehicles.
· ICICI insist its customers about online funds transfer, online bills pay and go paperless.
E) HDFC Bank
· To reduce environmental footprint it has undertaken effective measures like reducing paper consumption, efficient lighting solution etc.
· It has introduced desktop and server virtualization to reduce power consumption.
· Promotes paperless banking and also initiated energy management kits.
· It manages waste by tying uo with vendors for recycle paper and plastic and uses reusable plates and cups.
Therefore the private and public banks actively undertake green banking practices and also creates awareness about environmental issues.