Sovereign Green Bonds (SGrBs)

As per the latest notification, the Reserve Bank of India (RBI) will issue Sovereign Green Bonds (SGrBs) worth ₹ 16000 crores in two tranches in the current financial year.

SGrBs were initially announced in Union Budget 2022-23. in November 2022, Sovereign Green Bond Framework was issued by the Ministry of Finance.

What are Sovereign Green Bonds?

• Sovereign Green Bonds are issued by a sovereign entity, inter-governmental group, and corporate with the aim that the proceeds of the bonds are utilized for green projects.
• The proceed of SGrBs bonds will be utilized in public sector projects which will help in reducing the carbon intensity of the economy.

Eligible category of projects under SGrBs Framework

• Renewable energy including wind, solar, bioenergy, and other sources which can use clean technology,
• energy efficiency including Green Buildings;
• clean transportation,
• sustainable water and waste management including recycling, waste to energy, and efficient disposal of waste;
• climate change adaptation;
• sustainable land use including afforestation, and sustainable agriculture;
• pollution prevention and control,
• sustainable management of living natural resources
• terrestrial and aquatic biodiversity conservation.

Key features of Sovereign Green Bonds (SGrBs) issuance

• Issue Method
  • They will be issued through Uniform Price Auction.
• Repurchase Transaction (Repo)
  • They will be eligible for Repo as per Repo Direction 2018.
• Statutory Liquidity Ratio (SLR)
  • SGrBs will be an eligible investment for SLR purpose.
• Underwriting
  • Primary Dealers will be eligible for underwriting in the auction of SGrBs as per RBI’s 2007 Underwriting scheme.
• Tradability
  • Eligible for trading in the secondary market.
• Investment by Non-residents
  • SGrBs will be designated as specified securities under Fully Accessible Route (FAR) for investment by non-residents.

What is the significance of Green Bonds?

• Stregthen India’s commitment towards achieving the target of net zero emission by 2070.
• It will help in attracting global and domestic investment in eligible green projects.
• It will also help in reducing carbon intensity of the economy.
• An important source of finance to deal with the threat of climate change.

What is Green Project?

The classification of Green Projects is based on the following principles:

• Encourage energy efficiency in resource utilization
• Reducing greenhouse gases emission
• Promotes climate adaptation and/or resilence
• Value and improve natural ecosystem