sector lending ( psl ) norms to encourage lending to such projects. over the years, we have been taking various policy measures to promote and support green finance initiatives through this route. for example, renewable energy projects have been included as a part of priority sector lending ( psl ). in 2012, reserve bank included loans sanctioned by banks directly to individuals for setting up off - grid solar and other off - grid renewable energy solutions for households and in 2015, the psl criteria was expanded to bank loans up to a limit of ₹15 crore to borrowers for purposes like solar / bio - mass based power generators, windmills, micro - hydel plants and for non - conventional energy based public utilities, viz., street lighting systems, and remote village electrification. in 2020, this limit for bank loans was doubled to ₹30 crore. it is heartening to note that in recent years, leading banks in india have also begun stepping up their exposure to the renewable energy sector. enablers for scaling up green finance in india 26. banks and financial institutions have always been the backbone of india's economic growth and as the country pivots to sustainable growth, they will have to take a lead and accelerate green lending. to support this acceleration, a number of structural changes may be needed in the traditional lending approach, including evaluation and certification of the green credentials of projects. in order to give focused attention to scaling up green finance, banks and financial institutions would have to invest in human resources and capacity building efforts as well as integrate environmental and social risk considerations into their corporate credit appraisal mechanisms. 27. a formal definition of green finance along with a taxonomy 13 is the need of hour as it would enable more precise tracking of finance flows to green sectors in india, which in turn, would help design effective policy, regulations and institutional mechanisms directed towards increasing both public and private investments. a taxonomy would also help banks and financial institutions in better assessing the climate risk in their loan portfolio, scaling up green and sustainable finance and mitigating the risk of greenwashing. 28. another key challenge in scaling up green finance is the availability of a robust ecosystem for third party verification / assurance and impact assessment and the green credentials of businesses and projects. this would also address potential greenwashing concerns and ensure unhindered flow of capital and funding to the entities. 13 a taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. it plays an important role in helping an economy scale

, the idea is to agree upon a common global baseline disclosure requirement which is interoperable among jurisdictions for comparability and consistency. the reserve bank, as a part of standard setting bodies has also been contributing and learning from global discussions and experiences. in our recently published discussion paper on climate risk and sustainable finance we have elaborated on how climate - related disclosure is an important source of information for different stakeholders ( e. g., customers, depositors, investors, and regulators ) of res to understand relevant risks faced by them and their approach to addressing such issues. 12. for the corporates, beginning from the current financial year fy 2022 - 23, sebi has mandated business responsibility and sustainability reporting ( brsr ) for the top 1000 listed companies ( by market capitalisation ) in india. the disclosures under the brsr framework would incentivize green financing and help banks and financial institutions in estimating their climate - related exposure to these listed companies. 13. while consistent and comparable disclosures, the first building block, would enable financial institutions make firm level risk assessments, the second building block, data, is required for making macro level assessment of risks. like any financial risk, reliable and comprehensive data on climate risk related exposures would aid in making sound policy interventions and undertaking climate scenario analysis and stress testing for the assessment of risks from climate events. this however is, easier said than done. while global efforts are underway to create data repositories and provide guidance on collection of data for better comparability ; availability of high quality, granular and sufficient data remains a challenge as of now. availability of granular data also remains crucial for modelling the forward - looking nature of climate events and developing metrics for monitoring climate - related financial risks. 14. the third building block, vulnerabilities analysis, is again a macro level exercise to understand the financial stability risks arising out of climate events and their impact on financial systems. it is focused on analysis and stress testing using various scenarios to help in better assessment of potential pressure points in the financial system and in understanding interlinkages between financial sector and real sector. while the development of climate scenario analysis, stress testing scenarios and analytical tools are still in their infancy, the need for integrating them with regular monitoring exercises and overall financial risk assessment has been well recognised. one particular challenge in modelling climate - related risks is the long time horizon which has to be considered. the climate events may often span across decades, if not