‘AI, green finance to redefine banking sector’

By Admin

05 Jul, 2025

The convergence of Artificial Intelligence (AI) and green finance is set to reshape India’s banking sector, transforming it into a more inclusive, efficient, and sustainable ecosystem. As climate challenges intensify and digital innovations accelerate, these twin forces are becoming central to banking reforms and economic resilience.

AI to Power Infrastructure and Inclusion

At the 15th Annual Banking & Finance Conference organized by the IMC Chamber of Commerce and Industry in Mumbai, Anand Sinha, Former Deputy Governor of the Reserve Bank of India (RBI), emphasized the transformative power of AI. According to him, AI is poised to strengthen India’s digital infrastructure, enhance rural financial inclusion, and boost operational efficiencies across the financial landscape.

From predictive credit scoring to smart automation in customer service, AI is enabling banks to reach underserved populations and streamline core operations. It offers tools to better understand customer behavior, reduce risk, and deliver personalized financial services at scale   especially crucial for a country with vast rural demographics.

Climate Change: A Ticking Economic Clock

In his address, Sinha also brought attention to the looming climate crisis. Unchecked climate risks, he warned, could cost India a staggering 3% to 10% of its GDP annually by 2100. This stark projection highlights the urgency for banks and financial institutions to integrate sustainability into their operational and lending practices.

Green Finance: A Pathway to Resilience

Green finance   funding initiatives that support environmental sustainability   is no longer optional. It’s a critical tool for mitigating climate risk and steering India toward a low-carbon economy. As Sinha noted, commendable government initiatives like the Green Hydrogen Mission, National Solar Mission, and the issuance of Sovereign Green Bonds are already in motion.

The RBI’s regulatory push further strengthens this transition. By promoting green loans, mandating climate risk disclosures, and encouraging green deposits, the central bank is guiding financial institutions to align their strategies with sustainable development goals.

Bridging the Systemic Gaps

Sanjaya Mariwala, President of IMC, also acknowledged India’s advancements in digital finance, but cautioned that systemic challenges still exist. Addressing these   whether regulatory, technological, or infrastructural   is essential to fully harness the benefits of AI and green finance.

Conclusion: Banking on the Future

The Indian banking sector stands at a pivotal juncture. By embracing AI and green finance, banks can lead the charge toward a digitally empowered and environmentally responsible economy. But success will depend on strategic investments, regulatory foresight, and inclusive practices that ensure no one   or the planet   is left behind.