Abstract: Carbon pricing has emerged as an important market-based mechanism to reduce greenhouse gas emissions by assigning a monetary value to carbon output. In India, the Carbon Credit Trading Scheme (CCTS), introduced in 2024, seeks to regulate emission intensity in high-emission sectors such as power, steel, and cement through tradable Carbon Credit Certificates (CCCs). While prior research largely concentrates on regulatory design and environmental outcomes, limited empirical attention has been given to how carbon markets influence banking sector behavior.

This study examines the impact of CCTS participation on bank lending rates using the State Bank of India (SBI) as a case study. Adopting a descriptive and quantitative research design, the study utilizes secondary data from SBI’s FY2025 Annual Report and sectoral carbon proxies, applying ratio analysis, regression analysis, and correlation analysis. The findings indicate a statistically significant negative relationship between carbon credit accumulation and lending rates, confirming the presence of green pricing incentives. Additionally, green funding mobilization shows a strong negative correlation with cost of deposits, suggesting funding efficiency benefits. The study concludes that carbon credit trading is emerging as a financial pricing determinant in India’s banking sector.

Keywords: Carbon Credit Trading, CCTS, Green Lending, Net Interest Margin, Transition Risk, Sustainable Finance.

Downloads: | DOI: 10.17148/IARJSET.2026.13330