Sustainable Finance and ESG Integration in Modern Banking: An Indian Perspective

Praveen Asokan¹, Kokula Krishna Hari²

¹Manager, State Bank of India, New York, United States of America

²Director, World Data Organisation, New York, United States of America

Abstract

This chapter provides a comprehensive scholarly examination of the integration of Environmental, Social, and Governance (ESG) criteria and sustainable finance principles within the Indian banking and financial system. Drawing upon a structured review of regulatory instruments, market data, and extant theoretical literature, the chapter traces the evolution of ESG from a peripheral investment consideration to a central pillar of contemporary banking strategy and regulatory compliance. The analysis situates India's sustainable finance trajectory within the broader global context, referencing the Paris Agreement (2015), the United Nations Sustainable Development Goals (UN SDGs), and the Net-Zero Banking Alliance (NZBA). Key regulatory developments examined include the Securities and Exchange Board of India's (SEBI) Business Responsibility and Sustainability Report (BRSR) framework, the Reserve Bank of India's (RBI) Master Directions on Green Deposits and Climate Finance, and the issuance of sovereign green bonds totalling INR 477 billion by the end of 2024. Market data sourced from Climate Bonds Initiative and MUFG (2024) reveal that India's cumulative aligned GSS+ debt reached USD 55.9 billion by December 2024, representing a 186% increase since 2021, positioning India as the fourth largest emerging market source of such instruments globally. The chapter identifies structural challenges including data scarcity, regulatory fragmentation, greenwashing risk, and capacity gaps at smaller financial institutions. It concludes with forward-looking policy recommendations for a coordinated regulatory, institutional, and market-driven approach to sustainable finance in India.

Keywords

• ESG, sustainable finance, green banking, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), climate risk, Green bonds, green deposits, BRSR, India, emerging markets, stakeholder theory

Author's Profile

Author profile can be generated and linked through our partners World Book of Researchers. To include your profile online Click Here. After it is approved, please email to edlib @ asdf.res.in to create a link with all the articles.

• Praveen Asokan : Profile
• Kokula Krishna Hari : Profile

e-AID

Cite this Article as Follows

Asokan, P., & Hari, K. K. (2026). Sustainable Finance and ESG Integration in Modern Banking: An Indian Perspective: GPIR 2026 - Article 007 - ASDF EDLIB Proceedings | Electronic Digital Library [Hardbook]. In D. James (Ed.), Global Perspectives in Interdisciplinary Research July 2026 (1st ed., Vol. 1, pp. 42-60). ASDF International. Retrieved July 30, 2026, from https://edlib.net/2026/gpir2026/gpirjuly2026007.html