RBI’s Clarifications on Green Deposits

On 29th December, 2023, the Reserve Bank of India (RBI) clarified that banks and non-banking financial companies (NBFCs) are not obligated to raise green deposits but must adhere to the prescribed framework if opted.

Key Points

  • The RBI-regulated entities (REs) should pay interest on green deposits to their customers as per agreed terms and conditions and prescribed directions irrespective of allocation/utilisation of proceeds.
  • There is no restriction on premature withdrawal of green deposits.
  • Premature withdrawals will also not have any bearing on activities/projects undertaken using the proceeds of green deposits.
  • REs can temporarily park proceeds of green deposits, pending allocation towards green activities/projects, ....
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