The Reserve Bank of India (RBI) has said that sovereign green bonds (SGrBs) worth Rs 16,000 crore will be auctioned in two tranches in January and February. The central bank on Friday said that 5-year and 10-year green bonds worth Rs 4,000 crore each will go under the hammer on January 25 and February 9.
In a press announcement, the central bank said that the proceeds of these auctions will be deployed in public sector projects which help in reducing the carbon intensity of the economy. The auction would be a uniform price auction, the central bank said.
“As announced in the Union Budget 2022-23, the Government of India, as part of its overall market borrowings, will be issuing Sovereign Green Bonds (SGrBs), for mobilising resources for green infrastructure,” the RBI said in the press note.
The central bank said that it was notified in the half-yearly issuance calendar for marketable dated securities for the second half of the fiscal year 2022-23 on September 29, 2022, that SGrBs for an aggregate amount of Rs 16,000 crore would be issued. The Government of India has issued the Sovereign Green Bond Framework on November 09, 2022.
i) 05 Year SGrB for Rs 4,000 crore
ii) 10 Year SGrB for Rs 4,000 crore
i) 05 Year SGrB for Rs 4,000 crore
ii) 10 Year SGrB for Rs 4,000 crore
Feature of sovereign green bonds
The Centre has said the Sovereign Green Bonds’ objective is to mobilise resources for green infrastructure as part of the government’s overall market borrowings in 2022-23. Its features are as follows:
The Centre announced a framework for sovereign Green Bonds in November 2022, with a committee, headed by the chief economic advisor, to look into eligible projects for financing, which do not include large hydropower plants.
The framework states that the payment of principal and interest on the green bonds will not depend on the performance of the eligible projects. Therefore, investors will not bear any project-related risks.
“The eligible expenditures are limited to government expenditures that took place a maximum of 12 months prior to issuance. It will be endeavoured that all the proceeds get allocated to projects within 24 months following issuance,” the framework said.