Climate change is one of the toughest challenges that South AsiaSouth Asia is facing concerning sustainable economic growth. The fulfilment of national commitments under the Paris Agreement and the advancement towards the Sustainable Development Goals will significantly benefit from financial assistance. This study uses principal component analysis (PCA) to create the Green Financial Development Index (GFDi)Green Financial Development Index (GFDi) and uses the ranking method to analyse the performance of the countries from 2002 to 2022. The index comprises four indicators of green finance: green investment, green trade, green credit, and carbon finance. The findings indicate that India has the most significant investment opportunity due to its size and population, while the remaining countries in South Asia have significant development potential. Pakistan, Bangladesh, and Sri Lanka are ranked 2nd, 3rd, and 4th. The 5th, 6th, and 7th positions on the South Asian green financial strength are occupied by Afghanistan, Nepal, and the Maldives, respectively. Despite being carbon-negative, BhutanBhutan performs poorly in South Asian GFDi due to weak economic and social development. This analysis necessitates introducing GFDi in South Asia, given its heightened susceptibility to the consequences of climate changeclimate change. Thus, this paper presents a GFDi that could assist policymakers and investors in making more informed decisions regarding the advancement of green finance (GF).