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What are Sovereign Green Bonds (SGrBs)?

Reserve Bank of India (RBI) has released the issuance calendar for marketable Sovereign Green Bond (SGrB) for the financial year 2022-23.

What are Sovereign Green Bonds (SGrBs)?

Sovereign Green Bonds (SGrBs) will be issued by Government of India for mobilising resources for green infrastructure and the proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy. 

How much SGrB will be issued?

As announced in the Union Budget 2022-23, Government of India will be issuing Sovereign Green Bonds (SGrBs) as part of its overall market borrowings. Accordingly, SGrBs for an aggregate amount of ₹16,000 crore would be issued during the second half of the fiscal year 2022-23. 

What are the features of SGrB issuance?

The features of the SGrB issuance will be as under –

Issuance Method SGrBs will be issued through Uniform Price Auction.
Non-competitive bidding facility 5% of the notified amount of sale will be reserved for retail investors for non-competitive bidding. Individual investors can place bids through Retail Direct portal as well.
Minimum Bid Size SGrBs will be issued for a minimum amount of ₹10,000/- (nominal) and in multiples of ₹10,000/- thereafter.
Issue of Securities Issue of SGrBs will be by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with RBI or in the form of Stock Certificate.
Payment of Interest Interest on the nominal value of SGrBs will be paid half-yearly.
Re-payment of Investment SGrBs will be paid at par on the date of maturity.
Tradability SGrBs will be eligible for trading in the secondary market.
Investment by Non-residents SGrBs will be designated as specified securities under the ‘Fully Accessible Route’ for investment in Government Securities by non-residents.
Eligibility for Repurchase Transactions (Repo) SGrBs will be eligible for Repurchase Transactions (Repo).
Eligibility for Statutory Liquidity Ratio (SLR) SGrBs will be reckoned as eligible investment for SLR purpose.
Underwriting Underwriting in the auction of SGrBs by the Primary Dealers.
When-issued Trading SGrBs will be eligible for “When Issued” trading.

What is the issuance calendar for SGrB?

The issuance calendar for SGrB is as under –

Date of Auction Amount
January 25, 2023
₹8000 crore
(₹4,000 crore each for 5 Year SGrB and 10 Year SGrB)
February 09, 2023
₹8000 crore
(₹4,000 crore each for 5 Year SGrB and 10 Year SGrB)

Framework for Sovereign Green Bond 

Government of India has issued the Sovereign Green Bond Framework on November 09, 2022. As per the framework –

  • Government of India will use the proceeds raised from SGrB to finance and / or refinance expenditure (in parts or whole) for eligible green projects falling under ‘Eligible Categories’ which include renewable energy projects, projects that promote energy efficiency, projects towards pollution control, etc.
  • It will be endeavored that all the proceeds get allocated to projects within 24 months following issuance. The devolution of funds will be in tranches and shall be dependent upon the achievement of the physical targets as specified in the approved project document.
  • Ministry of Finance has constituted a “Green Finance Working Committee (GFWC)” chaired by Chief Economic Adviser, Government of India, to support selection and evaluation of projects.
  • An annual report on the allocation of proceeds to the eligible projects along with description of projects financed, status of implementation, and unallocated proceeds will be brought out under supervision of GFWC. Impact of projects in respect of reduction in carbon intensity and environmental benefits will also be assessed and reported separately by GFWC.
  • The proceeds raised from SGrB will be deposited to the Consolidated Fund of India (CFI), and then funds from the CFI will be made available for eligible green projects. Public Debt Management Cell (PDMC) will keep a track of proceeds and monitor the allocation of funds towards eligible green expenditures.


References

Government of India. (2022, November 09). 'Framework for Sovereign Green Bonds Government of India'. Retrieved from https://rbidocs.rbi.org.in/rdocs/content/pdfs/FSGB06012023.pdf

Government of India. (2023, January 19). 'Auction for Sale (issue) of Sovereign Green Bonds (SGrB)'. Retrieved from https://rbidocs.rbi.org.in/rdocs/content/pdfs/GOLSG19012023_A.pdf

Reserve Bank of India. (2023, January 19). 'Auction of Sovereign Green Bonds'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55077

Reserve Bank of India. (2023, January 06). 'Issuance Calendar for Marketable Sovereign Green Bonds: FY 2022-23'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55004


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