Climate based risk assessment is an important priority for India’s financial sector and its regulators. The recently introduced Draft Disclosure framework on Climate-related Financial Risks, 2024 is a concrete step taken by the Reserve Bank of India towards climate risk sentience in its Regulated Entities (REs). The staggered timeline for implementation for various classes of REs for types of disclosures is well appreciated.

By its very nature, the risk to financing emanating from climate related events needs financial institutions to disrupt their envisioning of the future as business as usual. It needs a marked departure from the way that traditional risks operated within an understood frame of reference of how the world and its weather patterns worked.  

The objective of this paper is to make the process of encouraging climate risk sentient thinking, assessment and measurement, accessible and palatable to Indian REs. For this purpose, we have attempted to provide a medium term process framework trajectory and some easy to use tools. The main focus of this current exercise is encouraging a climate risk sentient culture at all levels of the Indian Banking system in a phased manner.

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