Current Affairs · Banking and Finance
A credit officer at a commercial bank evaluates a massive loan expansion application from a major textile firm. The plant is situated in a coastal area identified by the Reserve Bank of India's Sustainable Finance Group (SFG) as highly vulnerable to climate hazards, posing risks to SDG 6 (Clean Water) and SDG 13 (Climate Action). However, the project promises significant employment and industrial output aligned with the 'Viksit Bharat' targets. What is the most responsible risk assessment approach for the banker?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Ignore the environmental risk guidelines and evaluate the loan solely on the client's past financial statements and collateral.
- 2Conduct a detailed Climate Risk Assessment in line with SFG guidelines and condition the approval on adopting climate-resilient technologies or shifting to a safer location.✓
- 3Reject the loan application outright without giving any opportunity for restructuring or risk mitigation.
- 4Approve the loan immediately based purely on consumer demand and job creation metrics.
Correct answer
Conduct a detailed Climate Risk Assessment in line with SFG guidelines and condition the approval on adopting climate-resilient technologies or shifting to a safer location.
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