In addition to global environmental challenges, sustainable finance has emerged as an important tool for reducing environmental risk and promoting economic growth. The study examines the development of sustainable finance at the grassroots level through an analysis of green banking initiatives in Karnataka, India, with special focus on Vijayapura district. The main objective of this study was to reveal the complex interplay between sustainable finance and community engagement through consumer knowledge and perception of green banking practices in the local context of Karnataka. Using mixed methods, the study combined quantitative surveys with qualitative interviews to critically examine the state of green banking awareness among consumers in Vijayapura district. The survey had collected data on customer demographics, knowledge of green banking principles, and attitudes towards a sustainable economy. In-depth interviews further clarified the factors affecting consumer participation in green banking schemes. Preliminary findings indicate that consumers in Vijayapura district differ in their awareness and understandings of green banking principles. While some respondents show a keen interest in sustainable finance and are willing to participate in green banking activities, others express limited knowledge or skepticism about its benefits about factors such as education; income and access to information emerge as significant determinants of customer perceptions and behaviors towards green banking. This study contributes to the evolving discourse on sustainable finance by providing insights into the implementation of green banking systems on the ground in Karnataka, India. By highlighting the opportunities and challenges associated with community engagement in the sustainable economy, the findings connect policymakers, financial institutions, and communities seeking to promote the environment the norms of sustainability and inclusive economic growth.