Climate change, and especially, ‘climate deterioration’ is an alarming situation for the global scenario, and thus, the need for developing financial services and products that aim to reduce the effects of these changes is the need of the hour. This long-felt need has given birth to a new form of investing, known as green finance or broadly, sustainable finance. So, it can be said that green finance is a subset under the larger umbrella of the concept of sustainable finance. This article tries to bring to the knowledge of the readers the basic understanding of the concept of green finance, its various instruments available globally and its developments at the global and Indian level, highlighting the three stages of green finance’s evolution and its major theories. Further, it reveals the global presence of major green finance instruments like green bonds and its types, green mutual funds (MFs) and green stock exchanges. The article also deals with the concepts of emissions trading system and European Union’s Carbon Border Tax. The discussion becomes more specific in the subsequent sections, drawing the present picture of green finance concerning the Indian scenario—its green bank, green bonds, green MF and green stock exchange. Reserve Bank of India’s recent guidelines regarding green finance and India’s presidency at the last held G20 summit are also discussed, finally concluding with mapping the road ahead for India.

Green finance, green bond, sustainable finance, renewable energy, carbon tax, Paris agreement

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