India launches first-ever

sovereign green bonds

- By Ankit Agrawal
 ankitmay28
Playlist
For all my Videos.
 WHAT HAS HAPPENED?

On Friday (January 6), the Reserve Bank of India (RBI) announced

that it will, for the first-time, issue Sovereign Green
Bonds (SgrBs) worth Rs 16,000 crore,

In two tranches of Rs 8,000 crore each in the current financial year.

The RBI said it will issue 5-year and 10-year green bonds of Rs 4,000
crore each on January 25 and February 9.
 WHAT ARE GREEN BONDS?

Green bonds are bonds issued by any sovereign entity, inter-

governmental groups or alliances and corporates with the aim that,

The proceeds of the bonds are utilised for projects classified as

environmentally sustainable.

The framework for the sovereign green bond was issued by the
government on November 9, 2022.
 WHY THEY ARE IMPORTANT?

Over the last few years, Green Bonds have emerged as an important
financial instrument to deal with the threats of climate
change and related challenges.

According to the International Finance Corporation (IFC), a World

Bank Group’s institution, climate change threatens communities and
economies, and it poses risks for agriculture, food, and water supplies.
A lot of financing is needed to address these challenges.

It’s critical to connect environmental projects with capital

markets and investors and channel capital towards
sustainable development – and Green Bonds
are a way to make that connection.
 HOW IS IT BENEFICIAL TO INVESTORS?

Green Bonds offer investors a platform to engage in good practices,

influencing the business strategy of bond issuers.

They provide a means to hedge against climate change risks while

achieving at least similar, if not better, returns on their investment.

In this way, the growth in Green Bonds and green finance also
indirectly works to disincentivise high carbon-
emitting projects, as per the IFC.
 WHY GOVT HAS COME UP WITH THESE BONDS?

In August last year, the government said it stands committed to reduce

Emissions Intensity of GDP by 45% from the 2005 level by 2030,

And achieve about 50% cumulative electric power installed capacity

from non-fossil fuel-based energy resources by the same year.

In line with the commitment to significantly reduce the carbon

intensity of the economy, the Union Budget 2022-23 made an
announcement to issue Sovereign Green Bonds.
The country’s climate actions have so far been largely financed from
domestic resources and it is now targeting generation of
additional global financial resources.

The issuance of the Sovereign Green Bonds will help the Indian
government in tapping the requisite finance from potential investors
for deployment in public sector projects aimed at reducing
the carbon intensity of the economy.
 WHERE THEY WILL BE USED?

The government will use the proceeds raised from SGrBs to finance or
refinance expenditure (in parts or whole) for various green projects,

Including in renewable energy, clean transportation, energy efficiency,

climate change adaptation, sustainable water and waste management,
pollution and prevention control and green buildings.

In renewable energy, investments will be made in solar, wind,

biomass and hydropower energy projects.
Q. A new private bank is established under which of
the following?

A) Banking regulation Act 1949

B) Companies Act 1956

C) RBI Act 1934

D) All the above

India launches first-ever
sovereign green bonds
- By Ankit Agrawal
 ankitmay28

PDF on Telegram ankitmay28

PDF on Facebook

ankitmay28
 ankitmay28
Playlist
For all my Videos.