According to a report published by World Wildlife Fund (WWF), water crisis in India could further deteriorate the health of the Indian banks. About 40 percent of the gross credit exposure of Indian banks is in the sectors where water crisis are significant, the report added.
Launched with the collaboration with the Indian Banks’ Association (IBA), the WWF-India report ‘Hidden Risks and Untapped Opportunities: Water and the Indian Banking Sector’ provides substantial evidence that why water crisis is posing material risks for banks in India. The report reflects that power and agriculture sectors accounts for the highest gross credit exposure of Indian banks.
“Facing a crisis of non-performing loans with close to 10 per cent of gross-advances of the Indian banks that are on the risk of non-payment from debtors, these risks can place additional liquidity constraints on the already stressed balance sheets of banks in India,” added the report.
Citing NITI Aayog’s observation, WWF said, the country is going through its worst ever water crisis. “As water is a shared resource, India requires a comprehensive and sustainable water management plan by different stakeholders,” the report said.
While banks are exposed to the risks of water as lenders to businesses, it also places them in a distinctive position to influence businesses to pro-actively handle various water associated risks. That include using WWF’s Water Risk Filter and assisting flow of capital towards solutions which address such risks, the report added.