Reserve Bank of India (Small Finance Banks – Climate Finance and Management of Climate Change Risks) Directions, 2025
UR
- Applies toSmall finance banks
- StatusIn force
- RBI text changedRBI updated this document on October 01, 2026. BankPulse is re-reading it. BankPulse checked 25 points against RBI's new text on 2 October 2026. 24 stand. 1 are marked below and are being re-read.
- IssuedNovember 28, 2025
- Amendmentsnone tracked
- Length25 points in 5 sections · 2 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNovember 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Chapter I. Preliminary
1. Who is covered
Every small finance bank must follow these Directions.
2. Start date
This rule takes effect immediately.
3. Green deposit meaning
A green deposit raises money set aside for climate-friendly projects.
4. Greenwashing meaning
Greenwashing means marketing something as green when it is not.
Chapter II. Role of the Board
1. Board approval first
A bank must get board approval before raising green deposits.
Chapter III. Framework for Acceptance of Green Deposits
Must know
1. No special interest rate
Banks cannot pay a different interest rate on green deposits.
2. Parking unused money
Unused green deposit money can sit in safe assets for up to one year.
3. No fossil fuel funding
Green deposit money cannot fund new fossil fuel projects.
4. Large hydropower excluded
Hydropower plants bigger than 25 MW cannot get green deposit funds.
BankPulse example. A small finance bank is asked to fund a hydropower plant of 40 MW. Green deposit money cannot be used, because the plant is larger than 25 MW. A plant of 20 MW is not excluded on size.
5. Yearly board review
A review report must be placed before the Board within three months of the financial year end.
Do it
6. Policy on website
The green deposit policy must be posted on the bank's website.
7. Framework review
An outside expert must review the bank's green financing framework.
8. Impact report online
Banks must post their yearly green project impact report online.
Background
9. Rupee deposits only
Green deposits can only be in Indian Rupees, not foreign currency.
10. Deposit insurance cover
Green deposits carry the same deposit insurance as other deposits.
11. No unallocated-money penalty
Banks face no penalty if green deposit money stays unallocated.
12. Independent yearly check
An independent outside reviewer checks green deposit use every year.
Chapter IV. Repeal and other provisions
Background
1. Older circular cancelled
This notification cancels the earlier green deposit circular for these banks.
2. How the repeal was notified
The repeal of the earlier green deposit instructions was notified by RBI's circular of 28 November 2025.
3. Earlier repeals stand
Rules already cancelled before this notification remain cancelled.
4. Old rules stay repealed
Rules repealed before this document was issued remain repealed.
5. Old actions preserved
Anything already done under the old rules stays governed by those old rules.
6. Approvals carried over
Approvals given under the cancelled rules are now treated as given under these rules.
7. Other laws still apply
These Directions add to other laws. They do not replace any of them.
8. RBI's reading final
RBI's interpretation of any part of these Directions is final and binding.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for small finance banks
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RBI credit bureau reporting rules for small finance banks 2025
RBI credit card and debit card rules for small finance banks 2025
RBI customer service and fair conduct rules for small finance banks 2025
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