Due to an intermediary role of banks in the economy, they hold a unique locus with regard to sustainable development. Due to their prudent lending policies, environmental impact analysis, efficient credit approval systems, banks are well equipped to weigh risks and attach a price to these risks which sometimes are irreversible, hence banks have a significant role to play towards sustainable development and to reduce the carbon footprints. Indian banks had started green banking initiatives which has given immense mileage to customers and has also given benefits to banks also in terms of substantial cost reduction. The main objective of the study is to conduct the comparative analysis of issues and challenges and level of awareness, perception of customers and employees towards the green banking in select public and private sector banks in Indian banking sector. To achieve the objectives of study a survey was done on primary data collection method through Customers and employees of public and private sector banks with survey questionnaires which were administered among customers and employees of selected banks who evaluated the green banking initiatives of these banks. The paper concludes by bestowing statistically significant results for the alternative hypothesis designed, that is, “there is a significant difference present between private sector and public sector banks”, hence rejecting the null hypnosis for the alternative proclamation. Private sector banks face a higher degree of issues and challenges henceforth, public sector banks have shown better performance in the light of the given data. From the survey conducted among the customers and employees, the awareness and perception level have exhibited a surge in the public sector banks. This leaves us to proclaim, that the public sector banks have carved a better shape towards “Green Banking” leading to an economically efficient and sustainable banking world. The statistical data and figures will be beneficial for the upcoming researchers and policymakers, as it displays an overview of the variables relating to customers and employees in the two main tiers of the banking world, to achieve environmental goals. © 2019, Institute of Advanced Scientific Research, Inc.. All rights reserved.