The Reserve Bank of India (RBI) has announced that the maiden Sovereign Green Bonds (SGrBs) for an aggregate sum of Rs. 16,000 crore will be issued in two tranches of Rs. 8,000 crore each in January and February 2023, with the intention of mobilizing resources for green infrastructure.
- The proceeds would be used to fund public-sector projects that will help India reduce its carbon emissions.
The RBI has announced the indicative calendar for the issuance of SGrBs for the fiscal year 2022-23 (FY23), in consultation with the Government of India (GoI).
| S.No | Date of Auction | Amount | Security-wise Allocation |
|---|---|---|---|
| 1 | January 25, 2023 | Rs. 8000 crores | i. 05 Year SGrB for Rs. 4,000 crore |
| ii. 10 Year SGrB for Rs. 4,000 crore | |||
| 2 | February 09, 2023 | Rs. 8000 crores | i. 05 Year SGrB for Rs. 4,000 crore |
| ii. 10 Year SGrB for Rs. 4,000 crore |
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Backdrop
i.The Union Budget for 2022-2023 included SGrBs, in accordance with the objective to significantly minimize the carbon intensity of the economy.
ii.On September 29, 2022, it was announced in the half-yearly issuance calendar for marketable dated securities for the second half of FY23 that SGrBs worth Rs. 16,000 crore would be issued.
iii.Since then, the GoI has issued the Sovereign Green Bond Framework as part of its overall market borrowings on November 9, 2022.
What are Green Bonds?
Green bonds are financial instruments used by the government to raise funds from potential investors for programmes/schemes that promote environmental sustainability and climate adaptation.
- The objective of the SGrBs is to raise funds for green infrastructure as part of the GoI’s overall market borrowings in 2022-23.
Features of the SGrB issuance:
i.Issuance Method: SGrBs will be issued through Uniform Price Auction.
ii.Non-Competitive Bidding Facility: In accordance with the “Scheme for Non-competitive Bidding Facility” in the auction of Government of India-dated securities and Treasury bills, 5% of the notified amount of sale will be set aside for retail investors.
iii.Eligibility for Repurchase Transactions (Repo): SGrBs will be eligible for Repurchase Transactions (Repo) under the terms and conditions outlined in the “Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018” as amended from time to time.
iv.Eligibility for Statutory Liquidity Ratio (SLR): SGrBs shall be considered as acceptable investments for SLR purposes.
v.Underwriting: The underwriting in the auction of SGrBs by Primary Dealers will be in accordance with the “Revised Scheme of Underwriting Commitment and Liquidity Support.”
vi.When-issued Trading: SGrBs will be eligible for “When Issued” trading in accordance with the RBI’s guidelines for “Transactions in the When Issued Market in Central Government Securities.”
vii.Tradability: SGrBs will be eligible for trading in the secondary market.
viii.Investment by Non-Residents: Under the “Fully Accessible Route,” SGrBs will be designated as specified securities for non-residents to invest in government securities.
Recent Related News:
i.In December 2022, Union Finance Minister Nirmala Sitharaman approved the final and first Sovereign Green Bonds (SGrB) Framework of India. SGrB will focus on funding solar power projects, followed by wind and small hydro projects.
ii.All fossil fuel-related projects, and biomass-based renewable energy projects that rely on feedstock from protected areas are not a part of the framework.
About the Reserve Bank of India (RBI):
Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Headquarters – Mumbai, Maharashtra
Establishment – 1935
