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22 D CCP GREEN FINANCE

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Certified Credit Professional — Certified Credit Professional.

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Q

What is Green Finance in the context of Indian banking?

A

Green Finance refers to financial flows from banking, micro-credit, insurance, and investment that support environmentally sustainable economic activities, addressing climate change and ecological conservation goals.

Q

What is the primary purpose of a Green Loan as per LMA Green Loan Principles?

A

To finance or refinance eligible green projects exclusively.

Q

Which RBI initiative mandates banks to disclose climate-related financial risks?

A

RBI's Disclosure Framework on Climate-related Financial Risks, aligned with TCFD recommendations, requires banks to disclose physical and transition risks arising from climate change in their annual reports.

Q

What does the term 'greenwashing' mean in the context of sustainable finance?

A

Misleadingly claiming environmental benefits for financial products or projects.

Q

What are Green Bonds and who regulates them in India?

A

Green Bonds are debt instruments where proceeds are exclusively used for green projects such as renewable energy and clean transport; in India they are regulated by SEBI under its Green Bond Framework.

Q

What is a Sustainability-Linked Bond (SLB) and how does it differ from a Green Bond?

A

SLB ties coupon rates to ESG targets, not specific project use of proceeds.

Q

What is the full form of TCFD and its relevance to banks?

A

TCFD stands for Task Force on Climate-related Financial Disclosures; it provides a framework for banks to disclose governance, strategy, risk management, and metrics related to climate-related financial risks.

Q

What is the role of the Network for Greening the Financial System (NGFS)?

A

Global central bank network promoting climate risk management in finance.

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