State Bank of India, Axis Bank and Bank of Baroda are the three banks from India that are open to doing business in coal.
A new report shows that nine major Asian banks, including three of India, are open to doing business in coal – the dirtiest of all fossil fuels. These three banks are State Bank of India, Axis Bank and Bank of Baroda. The other Asian banks are from Indonesia (Bank Mandiri, Rakyat and Negara) and Japan (Mizuho, SMBC and MUFG).
A Netherland-based international non-profit BankTrack, which tracks commercial banks and activities they finance, put out a report titled, “Coal Havens: The policy loopholes keeping coal finance alive in Asia”, analysing how Asia’s growth engine is driven by massive coal consumption despite the world agreeing to transition away from fossil fuels at COP 28 in December 2023.
While the report focuses on the policy positions of the Asian banks, it also highlights that major US and European financiers are still investing in coal. Barclays, Citi, Standard Chartered, Deutsche Bank and others are exploiting the relatively opaque and unscrutinised finance routes of corporate lending and underwriting to finance the mining and burning of coal across the region.
What does the report say? The report surveyed the finance policies on coal projects of 30 major banks across India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand. These banks have over USD 8 trillion in assets under management collectively. The report also analysed the expansion plans of the companies – whether the bank applies thresholds on coal mining and coal power companies, its coal finance phase-out strategy and the exclusion of metallurgical coal.
The report finds three trends on how coal is still getting money. It reveals bank finance is increasing for “captive” coal power (coal-fired power that is off the energy grid and used for industrial activities like smelting). Further, project-specific finance is being dropped in favour of corporate lending and underwriting, and coal project developers are increasingly looking to domestic and regional banks and private equity investors to finance their operations.
The report underlines the weaker policies of the banks that fail to exclude dirty fossil fuels from investment portfolios leaving the door open to continued investment in climate destruction. Another research by the Delhi-based non-profit financial think tank Centre for Financial Accountability (CFA) shows that about 25-35% of Indian bank loans are exposed to carbon-intensive sectors, including coal, as per rating agency Moody.
A recent survey of the Reserve Bank of India shows that a majority of the banks have not related their climate-related financial disclosures with any internationally accepted framework. “Our own research finds that national financial institutions account for 93% of the sanctioned loans to coal-based power plants in India and the government-owned banks, including State Bank of India, still are the major lenders to privately owned coal plants,” said Anirban Bhattacharya, team lead on national finance at the CFA. “While it is good that RBI is surveying the modalities of green financing, it must take on much more of a regulatory than an advisory role if we are to be true to our climate responsibilities,” he adds.
This article was originally published in The New Indian Express and can be read here.
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