Sustaining eco-friendly through green banking Role of green banking to Sustaining eco-friendly Abstract
In a globalised economy, the industries and firms are vulnerable to stringent environmental policies, severe law suits or consumer boycotts. Since banking sector is one of the major stake holders in the Industrial sector, it can find itself faced with credit risk and liability risks. Further, environmental impact might affect the quality of assets and also rate of return of banks in the long-run. Thus the banks should go green and play a pro-active role to take environmental and ecological aspects as part of their lending principle, which would force industries to go for mandated investment for environmental management, use of appropriate technologies and management systems. This paper explores the importance of Green Banking, green banking products and providing banks in India. However, we find that there has not been much initiative in this regard by the banks and other financial institutions in India though they play an active role in India¶s emerging economy. Therefore, we suggest possible policy measures and initiative to promote green banking in India. Key words: Green bank, environment and eco friendly. Introduction
The term "Green Banking" is being heard more often today as more Americans look for ways in which they can help the environment. While green banking can encompass a wide variety of banking services or policies, many banks are actively promoting their online banking services as a form of green banking. The environment and the banking industry can both benefit as more bank customers start to use the online banking services that are available. Benefits of online banking include less paperwork, less mail and less driving to branch offices by bank customers, which all have a positive impact on the environment. Interestingly, online banking can also increase the efficiency and profitability of a bank. A bank can lower their own costs that result from paper overload and bulk mailing fees if more of their customers use online banking. Green banking also can reduce the need for expensive branch banks. Why green bank is necessary
Banks can do much more to help the environment than just promote online banking. A truly green bank can reduce their carbon footprint by building more efficient branches, implementing more energy-efficient operational procedures, offering transportation services for their employees and carefully screening their lending in environment-sensitive industries. Banks can also support eco-friendly groups, offer green lending and raise money for local environment initiatives. Banks that go to these significant lengths to be eco-friendly are a little more difficult to find than the banks that claim to be green by merely offering online services. Banks that offer rate incentives on CDs, money market accounts, online savings accounts and checking accounts for online banking also help the green banking cause by rewarding online banking customers. It take a little bit of an incentive to convert some people away from paper statements and branch banking. Green
Mortgages: Green mortgages allow home buyers to add as much as an additional 15% of
the price of your house into your loan for upgrades including energy-efficient windows, solar panels, or water heaters. The savings in your monthly energy bills can offset the higher monthly mortgage payments and save you money in the long run. The Energy Efficient Mortgage (EEM) is a type of HUD-approved green mortgage that will credit you for your home¶s energy efficiency in the mortgage itself. Banks offering these green mortgages will give qualified-HUD borrowers the opportunity to finance cost-effective, energy-saving improvements to their house. If you are undertaking an energy-saving house project, shop around for a bank that will offer a great deal on a green mortgage.
Green
Credit Cards: A green credit card allows cardholders to earn rewards or points which
can be redeemed for contributions to eco-friendly charitable organizations. These cards offer an excellent incentive for consumers to use their green card for their expensive purchases. Imagine the millions of dollars that could be raised for environmental groups if green credit cards really took off. Green
banking products and providing banks
Green
Loans: Wainwright Bank
Borrowers needing to finance an energy efficient home improvement can find a reduced home equity loan rate from Wainwright Bank. A 0.50% rate reduction for a regular home equity loan is
available to customers who set up automatic payments from Wainwright Bank checking accounts. Loans are fixed rate with terms of 5, 10 or 15 years. Energy efficient home improvement projects can also have some federal tax benefits.
Green$ense
Rewards: Citizens Bank
The Citizens Bank Green$ense checking account will pay you ten cents every time you make a paperless transaction in your checking account. This can be a significant amount of paper saved for active bank customers who use a debit card, pay bills online, and set up automatic payments. You can earn up to $120 a year in rewards from Citizens Bank and guess what? The debit card that they send for your account is made out of recycled plastic.
Saving with a Green Account: Bank of Utah
The iSave Online Savings Account from Bank of Utah motivates you to help the environment by charging fees for any employee-assisted transaction. This can be perfect form of motivation to encourage some people to bank online. The account requires a Bank of Utah personal checking account, online Banking and eStatements. Each month only six pre-authorized, automatic, telebank or e-transfer debits are allowed. The minimum opening deposit is $100 and a $100 balance must be maintained to avoid service fees.
Striving to be a Totally
Green
Bank: Green Bank
This Texas-based bank has made a promise to act in environmentally and socially-responsible ways to support and strengthen the communities where they operate. Instead of only offering a few green banking products, Green Bank is adopting an eco-friendly mission for the bank from top to bottom. Products include green loans, green mortgages, green checking and green money market accounts. The Green Bank website also includes educational resources and a carbon footprint calculator. Seven Green Bank branch offices exist in the Houston and Austin area.
Green
Rewards Checking Accounts: Coulee Bank
The Free Rewards Checking account from Coulee Bank will pay a 3.33% APY on balances of $0 to $25,000 and 0.51% APY for any balance over the $25,000 if the monthly online banking qualifications are met. In addition, customers can receive up to $20 in ATM fee refunds every month. Reward checking account offers like this deal from Coulee Bank help promote green checking by offering strong incentives to rate-sensitive bank customers to convert and use online banking services.
The Green Account: Freestar Bank
The Green Account from Freestar Bank rewards customers who adopt green banking services like direct deposit, online banking, online bill payment, and debit card transactions. Customers who meet the monthly account requirements can earn a 4.00% APY on balances up to $25,000. By rewarding customers who use their green services, Freestar Bank is helping the environment by reducing paperwork and carbon emissions. Branch offices are located in Illinois. Green
Certificates of Deposit: Community Bank
Environmentally conscious residents of Iowa, Nebraska, and South Dakota can open a 12 Month Green Saver CD or a 24 Month Green Saver CD at Community Bank. The Green Saver CDs from Community Bank help promote the environment by utilizing online banking services. A small quarterly transfer deposit is required and additional deposits are allowed before the maturity date of a CD. The Community Bank green program is a simple way to benefit the environment through your normal banking activity. Customer¶s part in green banking 1. Go Online
It really is quite simple. Online banking = additional conservation of energy and natural resources Paying bills online, remote deposit, online fund transfers, and online statements are just a few of the ways that online banking can create savings from less paper, less energy, and
less expenditure of natural resources from banking activities. Customers can also save money by avoiding many of those late payment fees or overdraft fees that can sneak up if the customers use bank-by-mail or branch bankingservices. If the customers not yet signed up for online banking, find a green bank with an online banking platform and make the move today. 2.
Use Green Credit Cards
The benefit of using a green credit card is that some card issuers will donate funds to an environment-friendly non-profit organization. Imagine kicking back a percentage of every dollar to spend on the customer¶s credit card to a worthwhile cause. Research the latest green credit card deals to find a card that will give back to the organization. 3. Use Green Checking Accounts
Using
a
green
checking
account
helps
the
environment
by
utilizing
more online banking servicesincluding online bill payment, debit cards, and online statements. Consumers should be aware that banks offer green checking account because, ultimately, it helps their profits and not for purely altruistic reasons. They can profit customers as well because many reward checking accounts will pay ahigh interest rate to bank customers who meet certain monthly requirements. Typically, the top tier rate only applies on balances up to a preset balance amount like $25,000 or $50,000. Customers who do meet all the monthly online checking requirements earn some of the highest rates available on FDIC-insured deposits. Visit the Green Bank Report Checking Page for a list of the some of the latest green checking account deals. 4. Use Green Loans for Home Improvements
Before a customer undertake a major home improvement project, study if the project can be done in an eco-friendly manner and if the customer might qualify for a green loan from a bank. Green loans are perfect for energy-saving projects around the house. Find a better loan rate and save energy costs all at the same time. 5. Does Your Bank Really Want to Be
Green?
Most green banks will state in the information section of their website any commitment to the environment, sustainable policies, or the local community that the bank has made. If the customer still visit bank branches in his/her area, it is very easy to gauge the commitment made to the environment by the bank. Does the bank branch look like every other bank branch in the city or is the bank taking part in environment-saving policies around the office? 6. Political Considerations
Politics is part of the equation when evaluating who the best green banks are in the US. Banks support candidates who support the issues that they care about. However, just because the bank made a contribution to a Republican candidate is no reason to assume the bank is antienvironment. In the same vein, a few token contributions to Democratic candidates does not anoint a bank as ³green´. Anyone interested in the political stance of their bank can research the topic at open document sites like opensecrets.org. 7.
Stay Informed
The best green bank in the local area today, may not be the best green bank tomorrow. Stay informed on all the green banking news, rates, and deals by visiting GreenBankReport.com.
Conclusion
In a rapidly changing market economy where globalization of markets has intensified the competition, the industries and firms are vulnerable to stringent public policies, severe law suits or consumer boycotts. The banks should play a pro-active role to take environmental and ecological aspects as part of their lending principle which would force industries to go for mandated investment for environmental management, use of appropriate technologies and management systems. Green Banking if implemented sincerely will act as an effective
ex ante
deterrent for the polluting industries that give a pass by to the other institutional regulatory mechanisms. As Green Bank has rapidly expanded its operations, the challenge for its leadership has been on managing this growth successfully and prudently. Through strategic partnerships Green Bank seeks out advice and insight from outside experts to gain fresh ideas on new product development, marketing and business solutions to overcome the inevitable problems of rapid growth and to reach deeper into its customer base in an increasingly competitive market. .
