With a view to providing comprehensive solutions on global warming to Indian companies, HDFC Bank has signed Memoranda of Understanding (MoU) with two leading Carbon Credits service providers, namely, Cantor CO2E India Pvt Ltd and MITCON Consultancy Services Limited (MITCON). This exercise is a part of the bank’s efforts towards reducing greenhouse gas emissions into the atmosphere responsible for global warming.

As per the MoU, HDFC Bank and its two partners will work on awareness building, identifying and registering Clean Development Mechanism (CDM) projects and, facilitating the buy/sell of carbon credits in the global market.

This tie-up will enable the partners to provide products and services in an integrated manner to the bank’s clients across untapped sectors such as housing, agriculture, food processing, and microfinance besides power, metal and infrastructure.

The global carbon trade is expected to be $500 billion by 2012 and thereafter it is projected to grow by $200 billion annually. The Indian carbon market has the potential to grow around $5 billion by 2012.

Carbon credits are certificates issued to companies that reduce their greenhouse gas emissions. These credits are then sold to companies who cannot fulfil the Kyoto protocol norms. The Kyoto Protocol aims to reduce greenhouse gas emission by 5.2%, to below 1990 levels by '12, is a voluntary treaty signed by some 141 countries, including the European Union, Japan and Canada. The penalty for non-compliance in the first phase is E40 per tonne of carbon dioxide equivalent. In the second phase, the penalty will be hiked to E100 per tonne of CO2.

The two separate MoU’s with Cantor and MITCON were signed by Mr. P V Ananthakrishnan, Executive Vice President, HDFC Bank and Dr. Rambabu, Managing Director, Cantor CO2E India Pvt. Ltd. and Dr. Pradeep Bavadekar, Managing Director, MITCON Consultancy Services Ltd., in Mumbai.

Speaking on the occasion Mr P V Ananthakrishnan said, “By combining the expertise of these expert agencies and the in-house strength of the Bank, HDFC Bank will endeavour to create awareness and thereafter provide end-to-end solutions to clients like implementation of CDM projects, advisory services and value added products including structured finance, escrow mechanism and securitization of carbon credit receivables, besides financing on carbon credits”.

He added, “The Bank itself plans to focus on reducing carbon emissions by including it in the Bank’s CSR initiatives”.

It’s estimated that 60-70% of emission is through fuel combustion in industries such as cement, steel, textiles and fertilisers. Some gases like hydrofluorocarbons, methane and nitrous oxide are released as by-products of industrial processes which affect the ozone layer. One credit is equal to one tonne of carbon dioxide in the international carbon credit market. Carbon credit units are currently trading at around Euro 14 per unit.

Developed countries have to spend nearly $300-500 for every tonne reduction in carbon dioxide, as against $10-25 by developing countries. In countries such as India, greenhouse gas emission is much below the target fixed by the Kyoto Protocol and hence, excluded from reduction norms of emission. On the contrary, they are entitled to sell surplus credits to developed countries. Asia and Latin America are other key sellers of carbon credit in the international market.

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Promoted in 1995 by Housing Development Finance Corporation (HDFC), India's leading housing finance company, HDFC Bank is one of India's premier banks providing a wide range of financial products and services to its over 11 million customers across over three hundred cities using multiple distribution channels including a pan-India network of branches, ATMs, phone banking, net banking and mobile banking. Within a relatively short span of time, the bank has emerged as a leading player in retail banking, wholesale banking, and treasury operations, its three principal business segments.

The bank's competitive strength clearly lies in the use of technology and the ability to deliver world-class service with rapid response time. Over the last 13 years, the bank has successfully gained market share in its target customer franchises while maintaining healthy profitability and asset quality.

As on December 31, 2007, the Bank had a network of 754 branches and 1,906 ATMs in 327 cities.

For the quarter ended December 31, 2007, the bank reported a net profit of Rs. 4.3 billion, up 45.2%, over the corresponding quarter of previous year. Total deposits were Rs. 993.9 billion, up 48.9% over the corresponding quarter of previous year. Total balance sheet size too grew by 46.7% to Rs.1,314.4 billion.

For more information log on to: www.hdfcbank.com

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Lalit Pandey/ Rahul Sharma
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