JOR Study on the Emerging Trend of Green-Banking and Environment-Sustainability through PSBSIN India
- 1 ABSTRACT
- 2 INTRODUCTION
- 3 REVIEW OF LITERATURE
- 4 OBJECTIVES OF THE STUDY
- 5 METHODOLOGY
- 6 ENVIRONMENTAL SUSTAINABILITY
- 7 GREEN-BANKING
- 8 BENEFITS OF GREEN-BANKING IN INDIA
- 9 THE EMERGING TREND OF “GREEN-BANKING”
- 10 GREEN-BANKING INITIATIVES IN THE PUBLIC SECTOR BANKS (PSBs)
- 11 A SWOT ANALYSIS OF GREEN-BANKING
- 12 CONCLUSION
- 13 REFERENCES
The problem related to the environment, the maintenance of ecological balance and environmental-sustainability have become topics of debate throughout the world. Both organizations and consumers have understood the importance of the environment for the survival of human beings. The banking sector plays an important role in the economic growth of a nation. Given that public sectors banks (PSBs) are among one of the main sources of financing for commercial projects, they can play an important role in promoting environmental-sustainability by financing socially & environmentally responsible investment projects. The concept of green-banking is similarly a new concept. It is a paperless bank, which not only reduces the cost of banking activities but also helps the sustainability of the environment. It helps reduce the use of paper, power and energy. The main objective of this document is to know the role of green-banking in environmental-sustainability in PSBs in India and perform a SWOT analysis of the banking sector with respect to green-banking activities. However, we find that banks in India have not had much initiative in this regard, although they play an active role in the emerging economy of India. Therefore, we suggest possible policy measures and initiatives to promote green-banking in India.
Keywords: Green-banking, Environment-sustainability, Public sector banks, SWOT analysis
In India, green-banking is at its earliest stage. The use of green-banking banks is an opportunity to make a profit in the market by creating a difference in the development process of their strategy. In addition, banks must be more active in communicating the concept of green-banking and its associated benefits for consumers. It was also observed that awareness about green-banking is at the highest level of administration in banks and this consciousness is minimized with minimal administration, and employees are in contact with at least with clients. Therefore, banks should focus on promoting green-banking awareness and benefits that are in direct contact with customers. Green-banking is an active method of energy conservation and environment protection. The main advantage of the green-banking approach is to protect natural resources and environment. The Green-banking avoids paperwork at the optimal level and focuses on the use of electronic transactions such as ATMs, mobile banking, online banking etc. for different bank transactions of customers. Electronic transactions not only supports sustainability, but also provides the convenience of customers and banks. Less papers means less cutting the trees. To enforce eco-friendly businesses, banks can be adopted for credit to environmental standards because it improves the quality of the bank assets. This bank’s activity has a significant impact on the environmental performance of its depositors. Its customers have to work friendly with the environment. This not only does it improve the reputation of the bank, but also they have to face environmental regulations successfully and therefore, leads to better management of legal risks. Provides loans to customers with banks generally lower interest rates. This promotes more businesses to start with the project that is friendly to the environment, and therefore, the economy generally generates greater awareness of the environmental protection activities. Therefore, it is a vision of success for banks, because it generally benefits not only environmental benefits but also banks and their customers.
REVIEW OF LITERATURE
Ragupathi. M and Sujatha. S (2015), in this document in favour of Green-banking Institutions of Commercial Banks in India, they studied how to be green through green-banking. According to this document, the previous bank did not know the concept of green-banking. But now one day banks are playing an important role in the environmental-sustainability program. In the green-banking process, people are more aware of global warming and every businessman who helps to sustain the environment to make the land a better place to live. Bank standard in the future.
Singhal, Singhal & Arya (2014), in his document entitled Green-banking: A general description studied, how the bank can become more ecological. According to the study, the banking industry and financial institutions play an important role in the development of country. Green-banking saves both energy and environment. Now, many days banks offer organic products such as ATMs, green credit cards, green CDs, electronic funds transfer, use of solar and wind energy etc. But this is not complete yet. We want to make more efforts to save the environment and green-banking is one of the best ways to start it.
Jha & Bhome (2013), in his paper was “studying green-banking trends in India”, green-banking measures made by the public sector bank in India and which the green banks are studied. The main purpose of the document is to know about the green-banking sector and to examine the knowledge of employees, colleagues and public on the concept of green-banking. In addition, the study suggested that interest on loans should be less for an environmental project, then public interest rates and companies can increase their profits by waste recycling. They should emphasize green credit, green credit card and online banking.
A.J. Joshua, Moli P Koshy (2011), in this study, most respondents have access to computers and internet and are also very reliable in their use. Internet-banking, telephone-banking and mobile banking consumers spend more hours using computers and internet than non-users of these services. Translation of computer usage, internet usage frequency and browsing hours on internet results in better results than self-service banking. The result is that banks can be targeted to customers that use computers, the internet and other technology products are maximum.
OBJECTIVES OF THE STUDY
- To study the ecological sustainability and green-banking strategies in India.
- To study the numerous initiative taken toward green-banking and environment sustainability by PSBs in India.
- To study the SWOT analysis of green-banking mode of the PSBs in India.
- To suggest some practical solutions as coping these challenges successfully.
This is an exploratory research, so the methodology based on reviewing literature and secondary data. Research methodology is done in two steps: the first step, consist of a recent bibliographical review on green-banking and sustainable development, in green-banking, which showed the results and future measures recommended in the banking sector. The second step, the data collection on the Indian banks through the secondary sources published. Secondary sources were published on banks and other internet sites published on green-banking and other relative information.
The concept of environmental-sustainability began in 1969 with the formation of the National Environmental Policy Act (NPA, 2014) in the United States aimed at maintaining the production of harmony between human and nature, to promote common welfare and to fulfil the goals of social welfare purposes for current and future generations.
Environmental stability involves taking steps to reduce the interest in protecting the natural world, with special emphasis on making the environment’s ability to make decisions and maintain human life. This is an important issue in the present time, because people are realizing overall that companies and people can be on the environment. Environmental durable is about making decisions that will reduce the negative impact of your business on the environment. It is not just about generating or using waste energy or less energy, but it is about the development of the process that will make the companies in the future perfectly durable. Environmental-sustainability is the ability to maintain precious things in the physical environment (natural & biological environment).
The Green Bank is like a common bank, which understands all social and environmental factors. It is also called an ethical bank. Ethical banks have started with the aim of protecting the environment. These banks are like a common bank that controls the environment and controls the same authorities as a traditional bank. There are many differences in general banking comparison, green banks give more weight to environmental factors, their goal is to provide good environmental and social business practices, confirming all the factors before lending, if the project environment is friendly and the impact will pay in the future, only when it comes to environmental protection regulations.
It is relatively easy to define green-banking. Green-banking means to promote ecosystems and reducing the effects of your carbon from your banking activities. It comes in many types
- Use of online-banking instead of branch banking.
- Pay-bills online instead of sending them instead of mail.
- Open accounts in online banks, rather than multiple branches instead of big banks.
BENEFITS OF GREEN-BANKING IN INDIA
- Avoiding paperwork: Almost all banks of electronic banking are working in computerized or central banking solutions (CBS). Therefore, there is a large amount of paperless or less space for adoption of office papers, audits, reports and so on. These banks can switch electronic discussions and reports, such as digging control.
- Increasing awareness among the business about the environment: Many non-governmental organizations and environmental experts are encouraged to promote environmental awareness through awareness programs and seminars in the public and so on. Banks can sponsor such programs. In addition, many corporate institutions are automatically organizing similar programs in their online business, such as automobiles manufacturer “free Pollution Control Program” can connect banks with such companies. It will help to illuminate the bank’s image.
- Debt at relatively low rates: Banks can introduce loans with green loans for environmental products and projects as well, such as fuel consumption vehicles, green construction projects, installing solar power systems, housing and debt for, etc.
- Environmental standards for loans: For loans based on environmental standards, it is really a good idea, and business owners will change their business so that they are related to the environment, which is good for our future generations.
- Creating awareness among the business about the environment: Many non-government organizations and environmental experts are being spread through awareness programs and organization of seminars, etc. in the public. Banks can sponsor such programs.
THE EMERGING TREND OF “GREEN-BANKING”
Today the term “Green-banking” is often heard. According to the Association of Bank of India (IBA, 2014), “Green Bank is like a common bank, which considers all social and environmental / ecological factors with the aim of protecting the environment and protecting natural resources. It is also popularly known as an ethical bank or sustainable bank. Green-banking can reduce the impact of carbon along with banks of carbon also benefit from the environment. Online banking is an example of the Green-banking initiative.
The advantages of online banking include fewer paperwork, less mail and branches of banks by lower transfer expenses, which have a positive effect on the environment. Interestingly, online banking can also increase the bank’s power and profit. The bank can reduce its costs resulting in paper overload and mass shipping fees, if most of its customers use online banking. Green-banking can also reduce the need for expensive bank branches. Green-banking is also gaining importance in recent days. Most banks use computerization, networking, and offer online banking, which reduce the use of direct and non-direct paper, which control pollution.
Banks can also support environmental groups, offer green loans and increase funds for local environmental measures. Banks who are more likely to find out more than banks are offering online services for everything to be green. Banks who are concerned about the audit rates for deposit accounts, money market accounts, online savings accounts and online banking, help online banking customers also because of green-banking by giving awards .
There has been a notable improvement in operation related to banks in terms of worth reduction, productivity boost, profitability improvement, control and management of Non-performing assets (NPA), face risks, is carried out Asset Liability Management (ALM) is managed on changes in interest rates, handle fluctuations in exchange rate, comply along with the requirements of the regulator, finally, improve customer service for your greatest satisfaction. Hart & Ahuja (1996) initially studied a positive correlation between environmental performance and financial performance, the bank was only analysing their financial performance, but is still the time to analyse social as well as environmental performance. Green is not just a CSR activity of an organization, but it is also about making a society without harm.
Several volunteer guidelines have been set up for international and national level, classical and social risk rating, evaluation and management, such as financial projects of projects, such as the principle of resignation, the National Environmental Policy Law, the World Bank E&S Norms, the Carbon, CERCLA, ISO 14000, BSE Greenex, etc.
The International Finance Corporation (IFC) and Financial Times, a member of the World Bank Group, initiates a sustainable finance awards for those organizations who are involved in social, environmental and corporate governance in their business processes.
The awards highlight the partnership between financial and non-financial companies that are looking for finding challenges to finding a commercially renewable and innovative solution. According to the Financial Times, there are five types of sustainable finance awards:
- Sustainable-bank of the year.
- Technology in Sustainable-Finance.
- Achievement in inclusive-businesses.
- Sustainable-investment of the year
- Sustainable-Investor of the Year.
GREEN-BANKING INITIATIVES IN THE PUBLIC SECTOR BANKS (PSBs)
The PSBs include 21 Nationalised Banks, State Bank of India. By 1955, he was just a private commercial bank, whether by program or unscheduled, licensed unlicensed, foreign, or India, by all the property and private enterprises and stakeholders. The bank had three steps to nationalization. The first was July, 1955, when the Government of India nationalized the Imperial Bank of India to create the State Bank of India. It was an important attempt to introduce public sector banking in the country. On July 14, 1969, 14 major commercial banks nationalised became the second step of banking in the public sector. It was done with the view to meet the needs of the economy according to national priorities and goals. On April 15, 1980, six more banks were nationalised from the private sector. As a result, due to the domination of public sector banks, almost 90 percent of the banking activities were added to the public sector. Usually most of the people support the government. The PSBs were socially organized and publicly owned. It was made to provide a professional precaution to provide a substantial credit for banking administration and a new class of agriculture, small industries, exports and enterprises. He also intends to professionalise the banking administration through proper training of the banking officer. In retrospective, political feelings decide on both nationalists. Extensively expand branches, to raise employees ‘employees’ level, direct investment and credit programs, government interest management, credit payments through loans of poverty-assistance programs, loans, etc. To bring banking. For two decades however, when the private sector and foreign banks face tough competition, the PSBs have reverted themselves and have significantly improved the results of their services and operating.
A SWOT ANALYSIS OF GREEN-BANKING
An analysis of strengths, weaknesses, opportunities, threats (SWOT):
- Green-banking practice saves time for both clients and banks.
- The cost of banking operations and the cost of the client as well as the cost reduction.
- Transfer can be done in any volume and in any place.
- Not all banks do the same as green-banking practice.
- Through the solar and wind energy program funding, the bank is reducing the carbon impact of the environment.
- Quality customer process password takes place in green-banking process.
- Difficult to operate: banking sites may be difficult to first visit. Going on banking sites’ software you may need some time to read a lesson to feel comfortable in your virtual lobby.
- Customer service: there is no personal contact with any staff member, and if you speak with a staff member over the phone, you are guaranteed that you’re talking about the best active person.
- People are learning more in computing, so it is easy to start practicing green banks and attract clients to attract activities.
- Mobile banking and internet banking are increasing day by day, so it is time to spread an environmental banking process.
- Most customers only use an ATM card. So, for all the time to start all the steps for green-banking modes.
- This is a new concept and the client will be adopted.
- Green-banking requires a technology that will be very expensive.
- Bank employees need training for this process.
- Renewable and recycling techniques are expensive.
- Data protection is another challenge to adopt green-banking.
The Green Bank has promoted the improvement of environment and the promotion of economic growth. A few years ago, most traditional banks did not practice the organic banks or to find opportunities to invest in fields or companies that are environmentally friendly. Indian banks are far behind their counterparts in developed countries. If Indian banks want to enter global markets, it is necessary that they recognize their environmental and social responsibilities. Only recently, these strategies are often not only in small banks and cooperative banks, but often more among financial services, asset management companies and insurance companies.
In addition, industries which have already become environmentally and are making serious efforts to grow environmentally, should prioritize banks’ loans. The concept of “green-banking” will be beneficial for banks, industries and economies. Not only will the “green-banking” guarantee the greening of industries, but will help to improve the quality of bank assets in the future. There are many opportunities and challenges for Indian banks to adopt as “Green-banking” as a profitable business. The green-banking, if implemented with sincerity, will act as an effective ex ante deterrent for the polluting industries that give way to other institutional regulatory mechanisms. Therefore, for sustainable banking, green-banking should be adopted as a business model without delay.
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Nishant Jha and Shraddha Bhome (2013), “A Study of Green-banking Trends in India”, ABHINAV International Monthly Refereed Journal of Research in Management & Technology, volume II
Bihari, S. C. (2011), Green-banking: towards socially responsible banking in India. IJBIT
Alpesh Shah et. al. (2010), “Indian Banking 2020: Making the Decade’s Promise Come true”, Report of BCG, FICCI and Indian Banks’ Association