Reserve Bank of India (RBI) deputy-governor Swaminathan J. on Thursday said banks must brace for climate related financial risks even as he asked them to bring down their dependence on bulk deposits.

Speaking at the 10th SBI Banking and Economic Conclave here on Thursday, the RBI deputy-governor said climate change and its consequent risks cannot be ignored.

He pointed out that due to its geographic, environmental and economic characteristics, India is particularly vulnerable to climate change.

Moreover, variability in monsoon patterns in addition to temperature change impact crop production.

“Climate-related financial risks pose both micro and macro-prudential concerns. Climate change risk is ascending the hierarchy of threats to financial stability across advanced and emerging economies alike and consequently, the need for an appropriate framework to identify, assess and manage climate-related risk has become imperative,” he said.