The Reserve Bank of India (RBI) on 6th January announced that it will be issuing Sovereign Green Bonds to mobilising resources for green infrastructure.
Key points
- The RBI will auction 5-year and 10-year green bonds worth Rs 4,000 crore each on 25 January and on 9 February 2023, and this would be a uniform price auction.
- The proceeds from the bonds will be used in public sector projects which help in reducing the carbon intensity of the economy.
- Five per cent of the notified amount of sale will be reserved for retail investors as specified under the ‘Scheme for Non-competitive Bidding Facility in the auction of Government of India Dated Securities and Treasury Bills’.
Green bonds and salient features
- Green bonds are financial products that the government uses to produce the necessary funding from potential investors for programmes/ schemes that promote environmental sustainability and climate adaptation.
- Sovereign Green Bonds will be eligible for repurchase transactions (Repo) according to the terms and conditions mentioned in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time.
- Sovereign Green Bonds will be reckoned as an eligible investment for SLR purposes.
- Sovereign Green Bonds will be eligible for trading in accordance with the guidelines on ‘Transactions in the When Issued market in Central Government Securities’ issued by the Reserve Bank.
- Sovereign Green Bonds will be eligible for trading in the secondary market.
