Mumbai: According to Deputy Governor M Rajeshwar Rao, the Reserve Bank of India aims to issue guidelines for banks on stress testing for climate sensitivity of their credit portfolio in the near future.
He added that the impact of climatic disasters on banks and financial institutions is particularly harder to estimate due to the intangible nature of their repercussions, intensity, severity, and regularity.
To begin mitigating the risks posed by climate-related events to banks and other regulated institutions, it is necessary to quantify those risks. He made this comment during a panel discussion titled "Climate Implications for Central Banking," noting that this would only be achievable if companies disclosed the carbon intensity of their operations in a clear and complete manner.—Inputs from Agencies