Green Accounting Practices and their Influence on the Performance of Commercial Banks: A Conceptual Analysis

Abstract

The role of the banking sector in India extends beyond promoting economic growth and ensuring financial stability to include offering secure financial services to the population. However, the rapid growth of the economy has led to various environmental challenges. Consequently, the banking sector now faces a new challenge arising from environmental concerns, specifically financial risks stemming from loan defaults and environmental liabilities caused by borrowers. To ensure their stability, banks must embrace green accounting practices when making lending decisions to address these risks and comply with environmental regulations. Green accounting, also known as environmental accounting or sustainable accounting, is an accounting framework that integrates the economic value of natural resources and environmental impacts into conventional accounting practices. By incorporating environmental considerations into their operations, banks can contribute to the development of a more sustainable economy and meet the increasing demand for environmentally responsible financial services. This research paper focuses on exploring the concept of green accounting, its practices, and its implementation by the banking industry in India. Keywords: Banking sector, Economic growth, financial stability, Environmental challenges, Green accounting practices