This article examines the institutional frameworks necessary for the development of green finance within the banking system. The study analyzes macro-, meso-, and micro-level institutional mechanisms that support sustainable banking practices, including central bank regulations, green taxonomies, ESG integration, and environmental risk management. Particular attention is devoted to the role of international standards and regulatory frameworks in promoting environmentally sustainable financial activities. The article also discusses the major challenges associated with institutionalizing green finance, such as data asymmetry, maturity mismatch, and the shortage of qualified specialists. The findings indicate that the establishment of a comprehensive institutional framework is essential for ensuring financial stability and accelerating the transition toward a low-carbon economy.