Private sector lender Axis Bank has committed Rs 30,000 crore lending till fiscal year 2025-26 under its sustainable financing framework, a senior official said.
These commitments are in line with the Sustainable Development Goals (SDGs), supporting India’s commitments under the Paris Agreement.
"As part of its commitments, the bank has set a target of incremental lending of Rs 30,000 crore over the next 5 years, under wholesale banking towards pertinent sectors included in its Sustainable Financing Framework (SFF)," Rajesh Dahiya, Executive Director (Corporate Centre), Axis Bank told PTI.
Environmental, Social and Governance (ESG) is a measure which investors use as a tool to assess how good the practices of a company are. For the last 3-4 years, the words sustainability and ESG have made people sensitive about the whole idea of a sustainable planet, Dahiya said.
"These are the metrics which have been spoken about for about 3-4 years now. However, with COVID and all its problems, it highlighted the issue of sustainability in a very big and magnified manner.
"In the next five years, we want to lend Rs 30,000 crore more incrementally as wholesale banking towards pertinent sectors including Axis Bank''s SFF. We want to increase our portfolio of green lending," Dahiya said.
He said the bank's existing wholesale banking portfolio towards SFF, including green and social sectors, is little over Rs 29,000 crore and it intends to lend to companies where there are green practices.
After five years till 2025-26, the bank will assess these lendings to see positive social and environmental outcomes and increase it further, he added.
Going forward, the lender will also scale down its exposure to carbon-intensive sectors in its wholesale banking business portfolio.
The lender said it is expanding its ESG risk coverage in credit appraisal under its ESG policy for lending.
Axis Bank is building and deploying an ESG risk assessment toolkit, with ESG stress testing and ESG scenario analysis, for its large corporate, SME and agri-business verticals by 2022-23.
The lender will incentivise the borrowers for adopting good practices by offering 0.5 per cent interest waiver on new electric vehicle loans, effective immediately.
"We will make 5 per cent of our retail two-wheeler loan portfolio as electric by 2023-24 ," he said.
Besides, the bank has set the target of incremental disbursement of Rs 10,000 crore by 2023-24 under Asha Home Loans for affordable housing, and increasing share of women borrowers.
Also, the bank will aim to reach 30 per cent female representation in its workforce by 2026-27, aligned to its #ComeAsYouAre Diversity Charter.
Among others, it will plant 2 million (20 lakh) trees by 2026-27 across India towards contributing to creating a carbon sink.
Dahiya said Axis Bank is probably the first among corporates to constitute an ESG Steering Committee comprising heads of key departments who shall act as ESG champions within and outside the bank.
"Since the day COVID hit, our board got us together and decided...we want to create a practice which is differentiated and which is measurable," he added.
The bank has announced its commitments ahead of the upcoming 2021 United Nations Climate Change Conference (COP26) at Glasgow, UK from October 31 - November 12.
The participants are expected to talk about enhancing their commitments made at COP21 at Paris in 2015.
In line with its ESG strategy, Axis Bank has recently raised India''s first sustainable USD AT1 bonds of $600 million in the overseas markets.