Determinants and Barriers to Sustainable Banking Adoption: Evidence from the Indian Banking Sector.

Abstract

Sustainable banking has become an important focus within the global financial sector, with banks increasingly under pressure to integrate environmental, social, and governance (ESG) considerations into their operations. This transition is driven by various factors, including the need to mitigate climate change and environmental degradation and the desire for greater social responsibility and inclusion. Additionally, evolving regulatory frameworks are encouraging banks to shift toward sustainable practices. As a result, both public and private sector banks face various challenges as they work to incorporate sustainability into their business models and align their practices with international standards. Banks play a crucial role in economic development by influencing capital allocation and investment strategies. As custodians of significant financial resources, they have the potential to effect positive change through funding sustainable projects, supporting equitable growth, and advocating for responsible business conduct. Nonetheless, the transition to sustainable banking presents hurdles such as managing ESG risks, adapting business strategies to prioritise sustainability, and addressing the needs and expectations of various stakeholders, including regulators, investors, clients, and local communities. In this study, the various sustainable banking challenges facing public and private sector banks in the present scenario are discussed. To analysis the data IBM SPSS Statistics version 23 software was used.