What is Green Deposit? Meaning, Features, Benefits & How It Works
Written by Pradnya Surana
3 min read | Updated on November 27, 2025, 17:42 IST
Environmental awareness is growing and more businesses are adhering to eco-friendly practices. Business stakeholders, before getting associated, now also take note of the other party’s environmental impact, whether it's positive or negative.
Now banks also offer Green Deposits through which you can support for betterment of the environment. Let's understand this investment option.
What is a Green Deposit?
A Green deposit is a special fixed deposit (FD) where banks use your deposit money to finance green projects like renewable energy, pollution reduction, waste management, sustainable agriculture, electric vehicle manufacturing, etc. Unlike regular FDs, where banks use funds for any lending, Green FDs’ money is loaned only to initiatives which work towards the betterment of the environment.
How Green Deposit Work?
Opening a Green Deposit is as simple as opening a regular FD. This is how,
- You open a Green FD with a bank, just like a regular FD.
- The bank pools Green FD money separately from regular deposits.
- Banks lend this pooled money only to green projects.
- You earn interest like regular FDs. Your principal remains safe and insured.
- Banks report how your funds contributed to environmental benefits like carbon reduction, renewable energy generated, etc.
Probably, it is the simplest and easiest way to contribute towards saving nature.
Features of Green Deposits
Almost all the features of Green Deposits are similar to those of regular FDs
Same Safety as Regular FDs
Just like regular FDs, Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covers up to ₹5 lakhs per bank depositor. Your money is as safe as regular FDs.
Flexible Tenure
Available from 1 year to 10 years, similar to regular FDs.
Competitive Interest Rates
Most banks offer rates equal to or slightly higher than regular FDs to encourage green investments.
Multiple Payout Options
Choose cumulative interest or periodic payouts, be it monthly, quarterly or annually.
Minimum Investment
Starts from ₹1,000 to ₹10,000, making it accessible to most investors.
Transparency
Banks provide reports on which green projects received funding, offering accountability.
Thus, Green Deposits in function are just like regular FDs, albeit with a much larger impact.
Green Deposit vs Regular FD
| Feature | Green Deposit | Regular FD |
|---|---|---|
| Fund Usage | Only green projects | Any purpose lending |
| Interest Rates | Similar or slightly higher | Standard rates |
| Transparency | Reports on environmental impact | No specific reporting |
| Safety | DICGC insured | DICGC insured |
| Environmental Benefit | Direct positive impact | No specific impact |
Benefits of Green Deposits
Environmental Impact
Your savings actively support renewable energy, pollution reduction and sustainable development. One Green FD might help fund solar panels and another might fund plastic recycling
Competitive Returns
Banks offer the same or, at times, even better interest rates as compared to FDs.
Tax Treatment
Interest is taxable like regular FDs. Some proposals suggest tax benefits for Green Deposits, though not yet implemented.
ESG Compliance
For businesses and conscious investors, Green Deposits help meet Environmental, Social and Governance (ESG) investment criteria.
Future-Proof Investment
As climate regulations become stricter, the demand of demand projects is bound to increase. Supporting them now can reap many impactful benefits in future.
Social Responsibility
For the ones conscious, it’s a good feeling that your deposits are working towards creating a better planet.
Current Availability in India
Following RBI guidelines issued in 2023, major banks, including SBI, Bank of Baroda, HDFC Bank, Axis Bank and others, now offer Green Deposits. Check with your bank for specific products.
How to Open a Green Deposit
- Visit your bank's website or branch
- Look for ‘Green Fixed Deposit’ or ‘Sustainable Deposit’ options
- Choose the amount, tenure and interest payout preference
- Complete KYC documentation (Aadhaar, PAN)
- Fund the deposit and receive confirmation
Most banks allow online Green FD booking through net banking or mobile apps. Tracking Your Green Investments
Ensure your bank follows proper green lending guidelines and publishes transparent reports. Request periodic updates on how your funds contributed to environmental projects.
Saving our planet from the adverse effects of industrialisation and climate change is the need of the hour. Green Deposits, however small, have the potential to create impact for generations to come. If crores of Indians invest even ₹10,000 each in Green FDs, thousands of crores can flow into renewable energy and sustainable development.
About Author
Pradnya Surana
Sub-Editor
is an engineering and management graduate with 12 years of experience in India’s leading banks. With a natural flair for writing and a passion for all things finance, she reinvented herself as a financial writer. Her work reflects her ability to view the industry from both sides of the table, the financial service provider and the consumer. Experience in fast paced consumer facing roles adds depth, clarity and relevance to her writing.
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