Recognising the need for climate-smart economic growth, Prime Minister Mr. Narendra Modi has committed to India becoming a net-zero economy by 2070. He further announced that India will take its non-fossil energy capacity to 500 GW and reduce the carbon intensity of its economy by less than 45% by 2030. These pledges imply a massive expansion and transformation of the power sector. While necessary to mitigate the physical risks of climate change, these commitments potentially create significant transition risks for India’s financial sector.

This report provides an independent analysis to support the Reserve Bank as it plans its response to climate-related financial risks.

First, we demonstrate the compelling case for new guidance or regulation to maintain price stability in the face of low-carbon transition risks.

Second, we review the RBI’s mandate and identify key milestones in its sustainable finance journey.