The Banking, Financial Services and Insurance (BFSI) sector in India has evolved significantly in the past 10 years, particularly with cleaner balance sheets, digitalization and broader financial inclusion. However, the industry is currently confronted with emerging challenges associated with climate change, cyber threats, which increases the need for a more inclusive and sustainable system for the Indian BFSI Sector. This article examines the role of green finance in the Indian BFSI industry and its ability to serve both economic and environmental objectives in the long term. It examines the place of regulators such as the RBI and SEBI, the emergence of green bonds, green loans, ESG funds, and the application of technology such as AI, fintech, and blockchain. The paper also contrasts the public and the private sector banks to know how green banking programs are being put into practice. Although India has achieved a lot in such aspects as financing renewable energy and sustainability reporting, significant gaps are still present, particularly in financing climate adaptation, MSMEs, and smaller green projects. The paper concludes that green finance in India is transitioning to a more organized concept, rather than a CSR-driven concept, but challenges such as data quality, ethical governance, greenwashing, and funding gaps still hinder the process. On the whole, theanalysis demonstrates that green finance can be one of the major drivers of sustainable development in case it is reinforced with more effective regulation, the use of better technology, and inclusive financial policies.