EXPLORING GREEN BANKING AND ITS EFFECT ON PROFITABILITY: AN EMPIRICAL STUDY OF INDIAN COMMERCIAL BANKS

Abstract

Green banking, often known as ethical banking, tries to lessen the carbon footprint that comes from banking operations while simultaneously preserving the environment. By merging technological expertise with operational enhancements in banking operations, it incentivizes banks to make environmentally responsible investments. The use of green products and services, such as online, mobile, and ATM banking, as well as green deposits, green credit cards, green mortgages and loans, and green reward checking accounts, are examples of environmentally friendly practices. An organization's carbon footprint is a measurement of the quantity of CO2 it releases into the atmosphere. By implementing certain strategies, such as paperless banking, energy consciousness, using mass transit, and utilizing solar and wind energy, banks can lessen their carbon footprints. The primary goal of the study was to determine how Indian commercial banks' profitability was affected by green banking offerings. The current study has concentrated on four green banking services—total card payments, total retail electronic clearing, real-time gross settlement (RTGS) transactions, and the number of ATMs—among the products and services mentioned above. Data on Indian Commercial Banks over the last three fiscal years—2016–17, 2017–18, and 2018–19—was gathered through RBI Annual Reports. The study found that putting more of an emphasis on green banking services can boost banks' profitability. Only Total Retail Electronic Clearings, one of the four green banking services covered in this study, has demonstrated a meaningful influence on Indian Commercial Banks' profitability.