What is a Green Deposit?

What Are Green Deposits?

• Green deposits are interest-bearing fixed-term deposits where proceeds are allocated specifically towards green finance projects. These deposits are denominated only in Indian Rupees as per the Reserve Bank of India (RBI) framework.
• Purpose: Funds raised through green deposits are directed towards sustainable and environmentally friendly projects such as:
  • Renewable energy projects (solar, wind, biomass, and hydropower).
  • Energy efficiency and clean transportation.
  • Climate change adaptation and sustainable water/waste management.
  • Development of green buildings and coastal/marine environment projects.
  • Support for certified organic farming.
• Key features: Like regular fixed deposits, green deposits offer interest and fixed tenure.
  • Fund allocation is subject to an annual third-party audit to ensure compliance with green finance norms.
  • Deposits are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) framework.
• Priority Sector Lending (PSL): If the green activities/projects financed align with PSL guidelines, they can be classified under the priority sector.

Q1: What is the role of DICGC?

The DICGC is a wholly-owned subsidiary of the Reserve Bank of India (RBI) that provides insurance coverage to depositors in case of bank failure. It ensures that depositors receive up to ₹5 lakh per depositor per bank across all types of deposits, including savings, current, recurring, and fixed deposits.

News: Why green deposits are struggling to take root in India – The Hindu BusinessLine