Adaptation & Resilience
Problem Overview: Banks are unaware of physical risk their asset are exposed to & their capital impact
India is one of the world’s most climate-exposed economies, across almost every region. Annual Economic Losses due to climate events is growing at ~8% per year, with financial systems absorbing these shocks as well. ~60% share of Indian bank lending flows to agriculture, real estate and infrastructure sectors - all at very high climate risk - yet banks don’t have any tools to assess which asset is in a climate risk zone & how severe the implications of those risk will be. Physical risks can disrupt operations, and increase credit defaults, also leading to non-performing assets. This unmapped problem has a direct cost: A World Bank study in the Philippines from 2011 to 2018 found that a 1% increase in typhoon damage ratio led to an increase in non-performing loan (NPL) ratios by 2.3% in the banking sector, a multiplier that operates silently in Indian banking portfolio: where climate-impaired borrowers when breach the 90 day threshold to pay interest or principal - trigger Non-performing assets. Banks have to immediately provision for 15% leading to direct capital erosion on bank balance sheets.
Core Bottlenecks: Lack of geotagging, unit economics and fragmentation
Physical tagging is struggling due to systemic roadblocks:
1. Severe Data Infrastructure Deficit
There is no reliable geotagging method for legacy books of Banks, and whatever data is given is insufficient as they lack details about physical attributes and how they impact their portfolio.
2. Poor unit economics for commercial banks
Doing this in‑house means custom data pipelines, geospatial infra, and modeling teams, which can be hard to justify for all but the biggest players.
3. Fragmented demand
There’s no shared infrastructure spreading cost and data across the banking sector, for sharing challenges and learnings.
Existing Approaches and Technology Readiness
Risk Information System
Physical risk data is available from satellite sources & meteorological data but critical infrastructure to connect with credit workflow & asset tagging is missing.
Where is the white-space for innovation?
Banks are currently relying on district-level risk classification data, vendor supplied reports or sector exposure statistics - not individual asset level data. There is a need for innovation on following front:
Engineering
Individual asset level geocoded risk registry with real-time integration of climate datasets. RBI-aligned assessment and reporting formats. Scenario stress test modeling & call for action alert.
Business Model / Operation
A Risk tagging, alert & advisory platform sold through subscription or transaction fees to banks, NBFCs, insurers or other financial investment portfolios.
Financial Innovation
Financing systems & products can be explored for resiliency such as bonds, risk adjusted loan pricing, collateral evaluation, climate adjusted risk ratings and insurance mechanism that can be enabled.
How we identify climate innovation opportunities?
- Anusha Das, (2026,May). Small Steps for a Big Problem, Climate Risk Horizons
- Shashank Singh, (2019). Hidden Risks & Untapped Opportunities: Water & the Indian Banking Sector, WWF India
- Assumptions for calculations: Considered 40% of total climate loss sits in banking portfolio (based on above water & banking report) and 10% loss can be avoided by tagging. Market growth rate assumed as 30%
Abbreviations and other terms RB-CRIS: Climate Risk Information System NPA: Non Performing Assets, as per Reserve Bank of India’s Standard NPL: Non Performing Loans, as per International/ IMF standards
Last Updated On: June 5, 2026
Economic Potential
- India, 2025~480Mn USD[1]
- India, 2030~620Mn USD[3]
Impact Potential
- Lives Impacted (Direct & Indirect Exposed Borrowers)~70-250 Mn people
- Adaptation Risk Index ScoreIndia: 12/27
- Hazard
- Exposure
- Sensitivity
- Adaptive Capacity
- Vulnerability
| Low | Med | High |
|---|---|---|
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Connectivity
Access to Finance
p-ARL Score
7/12
Regulatory Outlook
Implemented
Nascent
Spotlight for innovation in India
Startups
Integrated Climate Risk, ESG & Carbon Reporting across all portfolios as per National & International frameworks
RB-CRIS (Government Platform) CRISIL ESG Rating (Government Platform) TERI IISc Climate Research : District hazard mapping Yes Bank, Union Bank, PNB (In-house assessment)