2024-02-04 19:07:00
Green deposit fund is an investment opportunity for those who realize the importance of green oriented projects
As the need to protect the environment from the impact of climate change is widely recognized, green initiatives are gaining momentum in the financial world as well. Green investments are also gaining popularity.
In that way, Green Deposit Fund Schemes called Green Deposit have also been introduced. Recently, State Bank of India has launched Green Deposit Fund named as Green Rupee Deposit Fund. Central Bank, A.U., Small Finance Bank etc. offer green deposit financing facility.
Green Purpose
The main objective of these types of deposit funds is to support environmentally friendly green projects. RBI has issued detailed guidelines for these. Investors who want to support projects that protect the environment can opt for green deposit funds when looking for deposit funds.
Banks should invest the amount raised through this mainly in environment friendly projects. Carbon emissions reduction projects, renewable energy support projects, and green transportation should be invested in.
RBI has also mentioned the sectors which are excluded from investing this fund. Investments in fossil energy based projects and nuclear reactor based projects are not allowed.
Projects related to alcohol, tobacco and palm oil are also not allowed. Projects that generate direct waste should also be avoided. Banks may also conditionally invest unallocated funds in liquid funds.
Insurance facility
Green Deposit Funds are not allowed to offer variable interest rates. The rate of interest can be given as per the norms already applicable. RBI has also clarified questions like whether green funds can be withdrawn earlier. There is no restriction on early withdrawal of investment.
Such divestment will also not affect the bank’s green investment activities, it said. Green deposit fund can be made in INR only.
It has been emphasized that investors should be informed about the green investment activities of banks. Insurance coverage that applies to regular deposit funds also applies to green funds.
While choosing a green deposit fund one should keep in mind the nature of the bank or financial institution offering it. Interest rate aspect should also be compared. Investors can also consider this option according to their investment strategy.
Green minded people can use this opportunity to meet their financial goals.
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