Green bank plan for Budget 2026
PHD Chamber of Commerce and Industry (PHDCCI), an industry body, has asked the central government to establish a Green Bank or Climate Finance Facility as part of Union Budget 2026 to tap private investments in clean technologies. The proposed institution would finance renewable energy, energy‑efficiency projects, electric vehicles (EVs), clean transport and other climate‑tech solutions.
“Through you, we have also flagged on leveraging the Reserve Bank of India’s own such initiative (RRBs) or spearheading a Specialised Green Bank which could act as an integral financial institution in achieving our target,” the PHDCCI said in its pre‑Budget submission. The suggestion was offered at an interactive pre‑Budget session with banking, financial services and insurance (BFSI) industry players in New Delhi.
How the Green Bank would work
PHDCCI has proposed that the Green Bank should be permitted to mobilise funds through issuance of green bonds and pooled financing mechanisms that can help in creating a long‑tenor, low‑cost capital pool for climate investments. The facility would be structured with risk‑sharing mechanisms such as partial guarantees, first‑loss capital and co‑lending structures aimed at making banks more comfortable lending to newer green technologies that did not yet have long performance track records.
The chamber also stressed the importance of strong disclosure and reporting framework in ensuring that green lending is transparent and meets global ESG and taxonomy standards. This, it said, would help prevent “greenwashing” and bolster investor confidence in Indian green debt markets.
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PHDCCI’s suggestion has been pegged on the Ministry of New and Renewable Energy’s (MNRE) 25-year perspective plan, which envisages an estimated ₹400 lakh crore or $4.1 trillion worth of investment till 2047 for clean energy transition including solar, wind and battery storage to make India a “Viksit Bharat”. This is a plan that needs dedicated mobilisation structures because today there isn’t enough domestic capital to do this.,” said Ashish Agrawal, Co‑Chair of PHDCCI’s BFSI Committee.
The Green Bank is envisaged as a vehicle, which can aggregate concessional, multilateral and domestic funds before leveraging them to trigger far larger private capital into the energy transition. This is consistent with the international trend that is seeing UK Infrastructure Bank and US green banks being deployed to boost climate investment.
Wider BFSI and MSME priorities
Instead of climate finance alone, PHDCCI’s Pre‑Budget expectations from BFSI sector include to increase on cheaper credit for MSME units, export hit sectors support and increased liquidity going into the economy. Chairman Gurmeet Chadha said that it was necessary to keep effective lending rates high for small businesses, however, the policy rate cuts carried out so far have not been passed on to borrowers in their entirety.
The chamber has, meanwhile, demanded a peps up bank-resolution framework, more ease‑of‑doing‑business in financial services and targeted schemes to transition MSMEs to cleaner technology available without diluting their competitiveness. It sees climate finance and MSME credit as linked since many small businesses are likely to require access to green capex financing in order to comply with future regulatory and export‑market standards.
Background of regulation about green credit risk
PHDCCI’s Green Bank pitch comes close on the heels of comments by RBI officials who recently said banks need to adopt a more forward‑looking position in assessing risks arising out of emerging green technologies which do not often have stability data available over the long run. RBI has already brought small renewable projects under priority‑sector lending and is building the RB‑CRIS climate‑risk information system to help enhance databases for financial institutions.
With the Budget session of Parliament likely to begin around January 28 and Finance Minister Nirmala Sitharaman due to present Budget 2026 on February 1, the government will now consider whether the Green Bank concept is one that can be implemented as a key plank of India’s climate‑finance architecture. A Green Bank backed by the Budget would send a powerful policy signal, one that would help “crowd in” private investors to solar and wind energy, electric vehicles (EVs) and climate tech at the scale India’s 2047 ambition requires.
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