A green deposit is a fixed-term deposit for investors looking to invest their surplus cash reserves in environmentally friendly projects.
This new offering in the market indicates the increased awareness of the importance of ESG (Environmental, social and governance) and sustainable investing.
With the momentum behind green banking products, many lenders like HSBC and HDFC have launched green deposits in India for corporates as well as individuals.
Key features of Green Deposits
The investment in this fixed tenure deposit will go towards financing eligible businesses and projects that promote the transition to a low-carbon, climate-resilient, and sustainable economy.
The amount for Green Deposits will be subject to limits basis availability of eligible projects and businesses.
Common themes for green deposits
Some of the common themes for green deposits are renewable energy, clean transportation, pollution prevention and control, green building, sustainable water, wastewater management, and others.
Why Green Deposits
These deposits provide investors a platform to fulfill their sustainability goals by investing surplus cash balances into actions that matter the most.
Corporates looking for inclusion of a sustainability agenda into their treasury activities or those that have limited opportunities for investment in environmentally beneficial projects can invest in HSBC’s Green Deposit for corporate clients.
Meanwhile, HDFC said an individual can earn interest at 6.55% on green and sustainable deposits, the period for which can range from 3-10 years.
Typically, HDFC offers 6.65% interest rates on normal deposits. So, people who want to opt for “green and sustainable” deposits will get 10 basis points lower in terms of return on deposits, which translates to Rs 100 on a deposit of Rs 1 lakh.
Also, senior citizens will be eligible for an additional 0.25% per annum on their deposits of up to Rs 2 crore.
Further, an additional interest rate of 0.1% per annum will be applicable on these deposits up to Rs 50 lakh if the deposits are made through the company’s online platform.
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