Bankers have sought from the RBI that lending for projects which emit low carbon should be put under the status of priority sector lending. They feel that such a move could work as an incentive for banks so that they finance more environment friendly projects.

As of now it is mandatory for all public as well as private sector banks to lend 40% of their total net advances to agricultural sector, weaker sections of the society and in the form of home and education loans.

According to Yashpal Gupta, chief general manager at IDBI Bank said: "The key challenge is to convince lenders that financing low carbon emission projects is viable." He said so while speaking on a seminar organised by the Indian Banks Association on the issue titled ‘Financing A Sustainable Low Carbon Indian Economy'.

He also said that banks could give equity support for such environment friendly projects. Further banks could charge more interest for those projects which emitted more carbon.

He gave yet another option suggesting that the Government can create a fund which could be used to guarantee the lesser viable environment friendly projects.