India to Issue Its First Sovereign Green Bonds by Auction on 25 January

The RBI (Reserve Bank of India) has announced the details of the country's first-ever sovereign green bond issuance.

In August last year, India's government said it stands committed to reducing its emissions intensity by 45% from the 2005 level, and generate about 50 percent of the country's electricity from non-fossil fuel-based energy resources, by 2030.

To achieve these commitments, India's government announced in its Union Budget 2022-23 that it would issue sovereign green bonds.

In a notice issued on Friday (6 January), the RBI said the issuance will be worth INR 160 billion (USD 1.9 billion), split equally between two tranches for the current financial year.

A 5-year bond worth INR 40 billion and a 10-year green bond of an equivalent amount will be issued by auction on 25 January, followed by two more issuances on 9 February.

5% of the sale will be reserved for retail investors under the RBI's non-competitive bidding facility.

The RBI clarified in the notice that sovereign green bonds will be eligible for repo transactions with the central bank, as well as for consideration as SLR (Statutory Liquidity Ratio) securities.

The sovereign green bonds will also be designated as specified securities under the "Fully Accessible Route" for investment by non-residents, meaning there will be no limit on overseas investment in the bonds.

According to India's framework for sovereign green bonds, which was issued in November 2022 and based on ICMA's green bond principles, the proceeds from the issuance will be used to finance or refinance green projects.

Such projects include investments in renewable energy, clean transportation, energy efficiency, climate change adaptation, sustainable water and waste management, pollution and prevention control, and green buildings.

Source: Regulation Asia