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Informist, Wednesday, Apr. 15, 2026

 

--Banking Secy: Govt alone cannot sustain green fin, need pvt cos to pitch in 

 

MUMBAI – India will not be able to meet its massive requirement for sustainable finance through public funding alone, and greater participation from private-sector players and institutional investors will be critical, M. Nagaraju, secretary in the Department of Financial Services, said Wednesday, underscoring the scale of capital needed for the country's green transition.

 

Speaking at an event here, Nagaraju said government resources and public-sector lending would fall short of the trillions of dollars required to finance India's climate commitments, including its net-zero ambitions. "Public finance cannot meet the demand for sustainable investment," he said. "It is the private sector which has to play a major role in mobilising resources."

 

India's transition to a low-carbon economy is expected to require an investment of over $30 trillion, with only a portion of this expected to come from public funds. The remainder will have to be mobilised from private capital, including domestic and global investors, he said. The secretary pointed to steps taken by the Reserve Bank of India and the capital markets regulator to facilitate green bond issuances, which have emerged as a key instrument to channel funds into environmentally sustainable projects.

 

Public-sector banks have already begun tapping this route, with lenders such as Bank of Baroda raising green bonds in recent months. Larger banks are also expected to follow suit as demand for sustainable investment products increases, he said. 

 

However, the secretary cautioned that green financing often comes with unique cost dynamics. While some environmentally focused investors may accept lower returns on account of climate considerations, infrastructure projects in sectors such as renewable energy or transition technologies may require higher upfront investment or risk premiums.

 

"To finance large-scale infrastructure, additional costs may arise, and these need to be addressed through a mix of policy support and market mechanisms," he said, adding that India has consistently sought greater financial support from developed countries to bridge this gap, though such flows have been limited.

 

While the insurance sector has begun playing a role in sustainable finance, India's pension ecosystem remains underdeveloped, limiting its ability to contribute meaningfully, Nagaraju said. "Even some smaller European countries have more developed pension systems. In India, the lack of an organised and aggregated pension ecosystem has limited its impact on infrastructure financing," he said.  End

 

Reported by Kabir Sharma

Edited by Rajeev Pai

 

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