India’s Banks Know Climate Is Their Biggest Threat
They say global warming is now the top contributor to systemic risk. So why aren’t regulators moving faster?
India is particularly vulnerable to rising temperatures.
Photographer: Mukesh Gupta/AFP/Getty Images
Twice a year, the Reserve Bank of India reviews the stability of the country’s financial system. Its latest report made for good headlines: The proportion of loans that have gone sour is at a multiyear low, and likely to decline further.
But buried in the report is a warning from the very institutions the central bank is charged with regulating. Market participants responded to a survey asking what they saw as the biggest contributors to systemic risk. While they downplayed the usual concerns — asset quality, interest rate risk, capital outflows — one particular threat loomed larger than ever before: climate change. In fact, respondents named it for the first time as the greatest source of systemic risk to the Indian financial system.