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Infosys - Green Banking

Infosys - Green Banking

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Published by Infosys
Infosys Finacle thought paper on green banking.
Infosys Finacle thought paper on green banking.

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Categories:Types, Brochures
Published by: Infosys on Jun 01, 2013
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06/01/2013

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Green banking
Thought Paper 
 
Universal Banking Solution | Systems Integration | Consulting | Business Process Outsourcing
 
 
Green banking
With the
„go green‟ mantra permeating all
spheres of life, the banking sector too hasadopted sustainable practices to reduce itscarbon footprint. Collectively termed
“greenbanking,” these initiatives range from day
-to-day banking operations to investments in
Current scenario
Some green banking initiatives worldwide include:
Paperless statements, bills and annual reports.
Donations to conservation charities as anincentive for choosing green products.
Special line of credit to homeowners for investment in energy-efficient upgrades.Listed below are some proactive initiatives of banks globally.
Canadian banks have adopted the Equator Principles, a set of globally recognized,voluntary guidelines established to assessand manage social and environmental risk inproject financing.
At the end of 2010, green credit issued by Bankof China exceeded RMB 190 billion with newissuances up by more than 40 billion.
Opportunity
Where is the money going? As per the Bloomberg New Energy Financepresentations, global investments in cleantechnology have increased from USD 54 billionin 2004 to USD 260 billion in 2011, withregion-wise investments in 2011 as follows.
02
Thought Paper 
companies involved in renewable and cleanenergy technologies. In a bid to discharge socialresponsibility while retaining profitability, banksare adopting green banking worldwide, withthose from the Asia-Oceanic countries leading
the way.
At the end of 2011, China Development Bankhad lent 658 billion Yuan to energy-saving,emission-reducing projects, accounting for 
12.7% of the bank‟s total outstanding loans.
 
China Development Bank Corp, which financesover 50% of overseas projects of Chineseenterprises, has financed a Chinese companythat operates an iron ore mine in Africa. Thesefunds are apparently utilized to move surfacesoil to a place of safety to protect local flora.
The State Bank of India has introduced
“green channel counters” and “no queuebanking” in over 5,000 branches across India,
doing away with deposit slips.North America and Caribbean - 30%
Europe - 24%
 Asia & Oceanic - 39%
Central & South America - 6%Middle East & Africa - 1%
 
 
Funding by banks
The numbers indicate that there is a clear and
BofA Investments (USD Billion)
present opportunity for banks to increaseprofits by investing in green ventures andcutting down on existing investments inconventional portfolios.Some investments by major global players andthe areas of investment are represented in thecharts below.
New Investments Pledged (in USD billion)
6050403020100
Bank of 
Wells Fargo
*Citigroup GoldmanAmerica (Pledged in 2007)
Sachs
New Investments Pledged (in USD billion)
(Source for values: http://nyti.ms/OdLXjp)
Regulatory environment
Banking regulators also discourage investmentsin industries with high energy consumption.For instance, China Banking Regulatory
Commission, China‟s top banking regulator,
ordered lenders to cut loans to industries with
Way forward
Clean technology investments are here tostay; however, a concerted effort is required toincrease the profit margins from such investments.Banks should track these funds and monitor their profitability.Some ways to implement green bankinginitiatives are:
Garner low cost eco-deposits specifically for eco-loans where customers get bonus credits
9876543210
Energy Renewable Consumer loansefficiency energy projects hybrid carsBofA Investments (USD Billion)
(Source for values: http://nyti.ms/OdLXjp
Quoting Catherine P. Bessant, Head, GlobalTechnology and Operations, Bank of America,
“The [clean tech] market is really vibrant, with
lots of transaction potential. If no one ever wrote
about it, we‟d be doing it anyway. It is absolutelycore to the success of the company.” The
company also pledges USD 100 million in grantsand low-interest loans. (Source: New York Times,http://nyti.ms/OdLXjp).high energy consumption and pollution levelsand favor green industries.The United States encourages investments inrenewable energy projects by offering taxcredits on them.as fixed or percentage points based on theprofits generated by these funds.
Offer eco-loans for eco-farming, greenbuildings and cars, and green technologyinitiatives at reduced interest rates.
Mobilize
social
media and mobile
technology, and online kiosks at branches, for promotions and marketing, instead of pamphlets and brochures.
Thought Paper 
03

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