Indian Banks Face Rs 6 Lakh Crore Risk In Extreme Weather Conditions

By Aditya Raghunath – The nonprofit environmental disclosure platform CDP said Indian banks face a risk of the Rs 6 lakh crore of debt deteriorating as extreme weather conditions such as flooding, cyclones and droughts pose a major risk to the banking system.

Some of the biggest Indian banks including State Bank Of India (NS 🙂 (India’s biggest lender), HDFC Bank Ltd (NS 🙂 (largest bank in the private sector), IndusInd Bank Ltd. (NS 🙂 and AXIS Bank Ltd (NS 🙂 are among the companies that reported climate risks to CDP in 2020, according to Building Back Greener, CDP’s annual report on India for 2020.

A Bloomberg report quoted Damandeep Singh, director of New Delhi-based CDP India: “The climate is the biggest risk for companies in the long run. Financial institutions are starting to understand this. As investors consider financing companies on the basis of environmental, social and governance disclosures, we have seen many more companies reporting risks related to climate change.

SBI put its total risk at 3.83 billion rupees while the HDFC bank estimated that 1.79 trillion rupees of its debt was at risk (up 24% from its 2019 figures). The risks of banks include reputational risk, amounts that must be paid to employees, and exposure to activities such as agriculture, coal, cement and electricity.

The CDP report was based on data the organization collected from 515 investors with $ 106 trillion in assets. The report indicates that 220 large and small Indian companies sent responses.