Govt of India To Issue Its Novel Sovereign Green Bonds for Aggregate Amt of Rs. 16,000 Crore

The Government of India would be issuing its novel sovereign green bonds for an aggregate amount of 16,000 crore, the Reserve Bank of India (RBI) said in its half yearly review report on government finances. The funds will be used for the developement of green infrastructure in the country.

Green bonds issued by the sovereign (i.e., these bonds carry guarantees related to repayment of principal and payment of interest by the sovereign or the government)
are termed sovereign green bonds (SGBs). The SGBs are similar to dated government securities except for the green clause.

The funds raised by the sovereign through the SGBs would form part of overall government borrowing.

Last month Minister of State for Finance Pankaj Chaudhary stated that Sovereign Green Bonds will likely be issued in the January-March period during the current fiscal. He stated that the objective of Sovereign Green Bonds was to mobilize resources for green infrastructure in order to finance the government’s market borrowings in 2022-2223 and the framework has been created for these bonds. These bonds were likely to be issued between January and March 2023.

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman had approved the final Sovereign Green Bonds framework of India. The approval further strengthened India’s commitment towards its Nationally Determined Contribution (NDCs) targets, adopted under the Paris Agreement, and help in attracting global and domestic investments in eligible green projects. The proceeds generated from issuance of such bonds would be deployed in Public Sector projects which help in reducing carbon intensity of the economy.

India’s first Sovereign Green Bonds framework was formulated and as per the provisions of the framework, Green Finance Working Committee (GFWC) was constituted to validate key decisions on issuance of Sovereign Green Bonds.

Further, CICERO, an independent and globally renowned Norway-based Second Party Opinion (SPO) provider, was appointed to evaluate India’s green bonds framework and certify alignment of the framework with ICMA’s Green Bond Principles and international best practices. After due deliberation and consideration, CICERO has rated India’s Green Bonds Framework as ‘Medium Green’ with a “Good” governance score.