RBI defers plan to mandate climate risk disclosures by banks, sources say

The Reserve Bank of India (RBI) has paused initiatives requiring domestic banks to report and address climate-related financial risks, according to three individuals directly involved in the discussions.

Transparency around climate exposures and eco-friendly investments forms a cornerstone of the global shift toward sustainable economies, with nations like the UK and Japan enforcing compulsory disclosures for financial institutions.

However, momentum behind climate risk management has diminished internationally following the recent reelection of US President Donald Trump.

The proposed RBI framework, under deliberation since 2022, would have mandated lenders to regularly reveal climate vulnerabilities within their credit portfolios along with reduction strategies and measurable goals.

As outlined in preliminary 2022 documents, these disclosures were slated to become voluntary beginning April 2027.

“Final regulations were prepared but deemed non-urgent currently,” stated one insider, requesting anonymity due to lack of media authorization. “Implementation could burden corporations financially as many lack systems to track climate impacts across operations and supply chains.”

The central bank declined requests for commentary.

This suspension marks the first reported delay of India’s banking climate disclosure standards.

Separately, the RBI has introduced protocols for financial institutions to activate recovery strategies during environmental disasters.

GOVERNANCE INCONSISTENCIES

The shelved guidelines required banks to quantify borrower emissions categorized by industry segments. Additionally, lenders would assess how climate disruptions might impair client repayment capacities.

Such measures might have increased financing costs for high-emission sectors and regions prone to climate events.

Postponement likely maintains existing lending approaches without penalizing environmentally vulnerable borrowers.

A second source highlighted misalignment between RBI expectations and India’s market regulator SEBI, which recently relaxed corporate requirements for supplier climate risk reporting.

“Banks need company climate data that businesses aren’t compelled to disclose under SEBI rules,” the source explained, stressing that harmonized standards remain essential for accurate risk evaluation.

India ranks among the ten nations most threatened by climate change according to Germanwatch’s 2026 Global Climate Risk Index, which analyzed extreme weather trends from 1995-2024.

During this period, the country recorded 430 catastrophic weather incidents, causing more than 80,000 fatalities and approximately $170 billion in economic damage – substantial credit risk factors for financial institutions.

Released on January 29, 2026