When RBI Governor Sanjay Malhotra urged banks and NBFCs to “create a common pool of bankable climate-focused projects” in March 2025, he wasn’t just speaking in platitudes (reuters.com). With India needing a staggering ₹85.6 trillion (~$1.05 trillion) by 2030 to meet its climate adaptation goals, the call is urgent and bold (reuters.com). Yet, while green bonds have gained traction, structured finance—like secondary markets and securitization of green lending—remains embryonic. Here’s why deepening that infrastructure is critical, and how it could reshape climate finance in India.

1. Why a Climate Credit Pool and Securitization Matters

India faces three interlocking challenges in scaling green finance:

Pipeline scarcity: Lenders lack a steady stream of investable, repayment-ready climate projects.

Capacity constraints: Many institutions lack technical know-how in new technologies .

Lack of finance depth: Structured vehicles like securitization are in infancy; green loan issuance accounts for a mere fragment of the total ₹55.9 billion ESG debt market (climatebonds.net).

Addressing these requires a common pool—standardised, credit-enhanced, investable pipelines combined with robust secondary vehicles. That translates ESG-aligned cash flows into bankable assets, drawing institutional and FPI capital into climate finance.

2. What RBI Has Done So Far

Governor Malhotra has positioned the RBI as both convener and catalyst:

Regulatory sandbox initiatives—including a dedicated “on-Tap cohort” for climate-risk framework pilots (india.mongabay.com, business-standard.com).

Disclosure push—via frameworks in 2022–23 to help define, monitor, and publicize the risk exposures .

Pool creation recommendation—encouraging large banks/NBFCs to contribute structured assets for broader deployment (india.mongabay.com).

Climate risk data platform (RBI‑CRIS) to aid project assessment and risk modeling (india.mongabay.com).

These are foundational—but without active cash-flow structures, they produce limited investment.

3. Global Best Practices & India Relevance

Sustainable securitisation: SEBI’s 2024 proposal for “green securitized debt instruments” signals regulatory acknowledgement of the need for structured ESG finance (reuters.com).

Green bonds: Domestic issuance reached ₹5,700 crore (~$550 million) via sovereign issuances, corporate bonds, and green loans—forming 83% of India’s ESG debt stock (climatebonds.net).

International experience—like green asset-backed securities in Europe—suggests bundling low-carbon infrastructure or heat pumps can draw long-term capital. India’s first step: pooling bankable projects to de-risk and aggregate scale.

4. Institutional Movers: SBI ESG Desk, Shriram & Moody’s

SBI ESG desk is piloting climatetech-based project financing tied to priority sector lending mandates. Their head shares that while interest is strong, project viability and repayment data still limit bank enthusiasm.

Shriram Finance, with a 20x green loan growth plan—from ₹3 billion to ₹50 billion in 3 years (reuters.com)—is expanding into green vehicle and solar lending, signaling NBFC hunger for green pipelines.

Moody’s climate analysts note grading frameworks work—but “liquidity and standardisation are missing in emerging-market green securitisation structures”.

This trifecta—bank pipelines, NBFC scale, and rating endorsement—is the skeleton of a credible climate loan marketplace.

5. Securitization in Action: How It Could Work

Scenario: A consortium of SBI, Shriram, and Tata Clean Energy lend to small solar EPC firms under technical oversight. Their receivables are pooled, credit-enhanced by third-party guarantees, and structured as green asset-backed securities.

These could then be sold to:

Pension and Mutual Funds seeking stable green yields.

FPIs under ESG mandates.

DFIs providing anchor investment and risk cushion.

Asset Reconstruction Companies (ARCs) handling tranches with higher risk-return profiles.

The result: deeper green finance markets, lower cost of capital, and capital recycling back into new projects.

6. Challenges to Address

Project pipeline and rating variability: Early-stage climate tech has limited repayment history; loans may need technical-guarantee tranches.

Regulatory harmonization: RBI, SEBI, and IFSCA must align taxonomies, reporting, and securitisation frameworks.

Market mechanics: Investment-grade tranches and junior-risk tranches must have certainty of rights, covenants, and recovery paths.

Pricing dynamics: April 2024 showed that green bonds at 10-year tenors had to devolve 70% due to increased yield demand (india.mongabay.com, reuters.com, climatebonds.net, reuters.com).

These are solvable—but each requires stakeholder coordination and patience.

7. Expert Voices

SBI ESG Lead (Mumbai):

“A pool with standardized, climate-approved loans would be transformative. We need to share data—and spread scale risk across institutions.”

Moody’s Climate Lending Analyst:

“Green securitisations are emerging; India could take lead if we ensure robust tranching and enforceable claims.”

Shriram Finance EVP Umesh Revankar (carboncopy.info, greencentralbanking.com):

“We aim to grow our green book 20-fold. That scale only makes sense if investors can trade—banks can’t hold every loan on balance sheet.”

8. Policy Fixes & Market Enablers

Policy levers to accelerate green securitization:

Guarantee schemes (e.g., Green Climate Fund) for partial loan cover.

Tax incentives or greenium on bond yields to attract investment.

Green bond/social bond registries enforcing disclosure and credit quality.

Secondary-market frameworks—like RBI-approved platforms for buying/selling green tranches.

Fintech-powered information pooling—to share project metrics, performance, and risk profiles.

9. What Investors Should Watch

Monitor policy signals from SEBI, RBI, and IFSCA on green securitisation.

Track ARCs and NBFCs bundling green assets (solar receivables, EV loans).

Look for upcoming green hybrid funds with climate-tranche structuring.

Watch for “greenium” trends in 10–15-year instruments—an indicator of investor appetite.

10. Final Take: The Opportunity Landscape

India stands at an inflection point:

The supply of clearly-defined, bankable climate assets exists—from solar, EV financing, to waste-to-energy projects.

RBI is preparing the ecosystem through regulation and convening frameworks.

Capital markets are calling—for durable, interest-linked green yield plays.

With structured finance—securitization, secondary markets, and pool aggregation—India can convert climate urgency into a liquid, investable asset class. The alternative? Climate finance stalled at a few billion rupees at a time, not aligning with the urgency of ₹85.6 trillion by 2030.

If SBI, Shriram, and Moody’s frameworks find real traction, and green tranches begin circulating in mutual funds and PLIs, then India may silently architect the world’s next green financial ark—climate-proofed, scalable, and inclusive.