Purpose – The purpose of this paper is to identify the critical success factors for sustainable growth of the Indian banking sector and develop a model for Indian banks by using interpretive structural modelling (ISM). It suggests some of the critical measures of sustainability for Indian banks. Design/methodology/approach – This paper aims to establish a relationship among the factors of sustainable banking through the opinion of experts from the banking sector. ISM approach is applied to bring down the complexity of relationship among factors. ISM ranked the factors as per their ability to facilitate and dependence on other factors and helps to develop a comprehensive, systematic model based on the relationship amongst those factors. After developing the model, second reviews by the experts are conducted for their comments and thus, the final model comes into existence. Findings – Legal and environmental compliance is determined as the key factor which is driving the other factors of sustainable banking. It will surely going to pose a challenge for business concerns for initiating various sustainable steps that will be a motivational factor for generating business opportunities and sustainable collaboration. Practical implications – The study provides a comprehensive framework of sustainable banking which can be applied to various Indian banks. It helps to develop coherence between conventional and sustainable dimensions of banking. Originality/value – The ISM is applied for the first time in case of sustainability in the banking sector to bring about a model for sustainable banking in India.

Introduction

The importance of sustainability for the development of a nation has been well documented in recent times. It has been widely accepted that the adoption of sustainability policies is a key for the overall development of India as a nation. Environmental and social issues are playing a major role among the lenders and borrowers. Major corporations have started realising the importance of sustainability in their daily affairs and started paying more attention towards it. Similarly, stakeholders are also moving towards environment friendly corporations to achieve the desired results. There came a new approach to sustainability through the banking sector known as sustainable banking. The whole financial sector, including the banking sector did not see themselves as environmental polluters and thus they took a very long span of time in recognising the concept of sustainable development. There are certain factors which plays an important role in the development of sustainable banking in India. However, there is a need for developing a comprehensive framework of sustainable banking that highlights the importance of these critical factors. In the words of Hoijtinkm (2005), banking can play an effective role in achieving the environmental, economic and social sustainability of any nation. Environmental sustainability states that how a bank is restructuring its activities in the favour of environment such as the use of renewable energy, less paper consumption, minimising the use of water and motivating the employees to use government run transportation, restricting lending activities only for environment friendly projects and to promote environment friendly products such as micro loans, investment opportunities in green funds, environment friendly bonds, etc. Similarly, economic sustainability deals with the aspects a bank is following as regards to its operations and support to the economy which includes corporate etiquettes, assimilation of sustainability parameters, clarity of bank operations, administration and norms and making economically viable investments. Lastly, social sustainability includes the development of society, development of bank’s human resource including shareholders, equal opportunities to women employees and to other minority groups. It also includes the concurrence of stakeholders in all the decisions and to follow the internationally laid down rules and regulations of sustainability. As mentioned by Tara et al. (2015), sustainability in the banking sector means the overall development of environment, society and economy with the help of new and innovative techniques. These techniques are less paper consumption, green service counters, green finance, green credit, education and hospital facilities for the poor and needy ones, etc. Sustainable banking also promotes those projects which aim at reducing their carbon production by adopting new methods and are of environment friendly nature.