• Dr. Gaurav Vats

India is one of the fastest-growing economies in the world; however, rapid privatization, industrialization, urban expansion, and mechanization have intensified environmental pressures and contributed to rising greenhouse gas emissions. Climate change and global warming pose systemic risks to economic stability, infrastructure, social welfare, and long-term development trajectories. As the backbone of India’s financial ecosystem, financial institutions (FIs)—including commercial banks, development finance institutions, non-banking financial companies, and capital market intermediaries—are uniquely positioned to mobilize capital toward climate mitigation and adaptation. A sustainable financial system enables markets to channel investments toward low-carbon technologies, renewable energy, resilient infrastructure, and environmentally responsible enterprises, thereby supporting balanced economic and ecological progress. This chapter examines the evolving role of financial institutions in climate financing, focusing on policy frameworks, regulatory initiatives, green lending, sustainable debt instruments, and risk management strategies in India. Particular attention is given to the issue of stranded assets and the reallocation of capital toward climate-neutral portfolios. Drawing upon government reports, Reserve Bank of India disclosures, EY sustainability assessments, OECD climate finance analyses, and other institutional sources, the study evaluates how financial institutions can accelerate India’s transition to climate resilience without compromising growth. The findings suggest that climate-aligned financial systems are essential for ensuring sustainable development while safeguarding economic stability and long-term societal welfare.

Climate Finance, Financial Institutions, Sustainable Development, Green Banking, Stranded Assets

"STRENGTHENING FINANCIAL INSTITUTIONS FOR EFFECTIVE CLIMATE FINANCING AND SUSTAINABLE DEVELOPMENT", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.13, Issue 9, page no.56-65, September-2026, Available :http://www.jetir.org/papers/JETIRHX06009.pdf

"STRENGTHENING FINANCIAL INSTITUTIONS FOR EFFECTIVE CLIMATE FINANCING AND SUSTAINABLE DEVELOPMENT", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.13, Issue 9, page no. pp56-65, September-2026, Available at : http://www.jetir.org/papers/JETIRHX06009.pdf