Mumbai – Indian banks have begun reporting how climate change could damage their loan books, under a Reserve Bank of India framework that phases in over three years and ends with the hardest disclosure of all.
The framework covers commercial banks, All India financial institutions and non-banking financial companies in the top and upper layers. Large cooperative banks follow a year behind.
Four pillars, two timetables
Disclosure is organised around governance, strategy, risk management, and metrics and targets. The first three began from financial year 2025-26. Metrics and targets, the quantitative pillar, start from 2027-28.
The staging is deliberate and revealing. A bank can describe its governance of climate risk within a year. Producing defensible numbers on its exposure takes considerably longer, because the data sits with borrowers rather than with the bank.
Scope 3 is the whole point
Banks must disclose Scope 1, 2 and 3 emissions. For a lender, Scope 1 and 2 are trivial, covering branch electricity and a vehicle fleet.
Scope 3 is the balance sheet. It is the emissions of everyone the bank has financed, and for a large Indian bank it will exceed operational emissions by orders of magnitude. Measuring it means obtaining emissions data from thousands of corporate borrowers, many of which do not currently produce it.
This is why the RBI framework and SEBI BRSR Core are best read together. The assured emissions figures that listed companies must file are precisely the inputs banks will need to compute financed emissions. One regime feeds the other.
Physical risk deserves more attention than it gets
Most commentary treats transition risk as the main concern. For Indian lenders, physical risk may bite sooner. Flood exposure in urban lending portfolios, heat stress on agricultural credit, and cyclone risk along the coast are present-tense credit questions, not scenarios for 2050.
The disclosures are published alongside financial results and made available online, which makes them comparable across banks for the first time.
Source: Reserve Bank of India disclosure framework on climate-related financial risks.
