New Delhi, April 13 -- Traditionally, credit decisions in India have involved assessments of financial statements, collateral requirements, and a healthy repayment history. While these remain critical, a structural shift is underway that is redefining how lenders assess risk.

Environmental, Social, and Governance (ESG) data is no longer just a consideration. It is fast becoming essential to evaluate the creditworthiness of the borrowers. While ESG was considered a "good to have" metric till very recently, it is soon evolving into a "must have," driven by regulatory guidance, investor expectations, and real-world risk exposure.

The RBI Framework for Acceptance of Green Deposits, effective from June 1, 2023, formalises how banks and NBFCs...