Viksit Bharat and net-zero as goals demand that India sets up a specialized transition finance institution
The scale, tenor and technological uncertainty of decarbonization investments exceed the risk appetite of commercial banks. Unlike typical greenfield projects, transition finance often targets the retrofitting of legacy assets with uncertain returns and payback periods of 15-25 years, creating an asset-liability mismatch for banks reliant on short-term deposits. Further, many transition technologies remain commercially untested in India, exposing lenders to default risks from technical underperformance and carbon price volatility.
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