Mumbai: DBS Bank, which had planned to grow its one billion Singapore dollar Environmental Social and Governance (ESG) finance book in India by 60% this year, is well ahead of schedule, with India ranking among the foreign lender’s top three markets, according to a top executive.
“We had said previously that we crossed the 1 billion SGD mark for DBS Bank India’s ESG financing book at the end of 2023 here in India. Then we said that we want to grow this by 60% by the end of CY2024,” Helge Muenkel, chief sustainability officer, DBS Bank said to ET.
“If I look at our position as on April 2024, we are massively ahead of plan. We are going to grow our ESG financing for India clients by a much greater quantum than the 60% that we had set out for this year,” he said.
According to Reuters, on Monday, one Singapore dollar was worth ₹61.84.
According to Muenkel, DBS’s six largest markets in the ESG finance space are India, Indonesia, China, Hong Kong, Taiwan, and Singapore. He stated that India is among the top three.
DBS Bank’s ESG financing book for Indian clients in December 2023 was slightly more than 1 billion Singapore dollars, up 40% from December 2022.
In FY23, DBS India reported a 37% increase in net profit to ₹228 crore, while customer assets increased by 10% to ₹50,701 crore.
“I’ve just been here a few days, I met the regulators, I met our clients… people really put money where their mouth is, a lot of really good discussions also with so-called hard-to-abate sectors,” Muenkel was referring to sectors such as steel and power, where reducing greenhouse gas emissions has traditionally been a challenge.
Muenkel mentioned recent ESG transactions in which DBS played a role, including a sustainability-linked loan with Tata Communications, an education financing loan for HDFC Credila, and social loans for Shriram Finance.
Going forward, DBS Bank’s primary focus for ESG finance in India will be renewable energy, followed by telecommunications, mobility, and agriculture, according to Muenkel.
“What I found really encouraging in the last few days were the discussions we had on battery storage, the discussions we had on pumped hydro because as we all know, it’s not enough to invest in renewable energy, you do need to invest in energy storage and of course, you need the grid,” he told me.
Over the last year, the Reserve Bank of India has repeatedly emphasised the importance of transitioning to an environmentally sustainable economy.
In February of this year, the RBI released a draft disclosure framework for regulated entities on climate-related financial risks, calling for improved disclosures to prevent asset mispricing and capital misallocation.