RBI Announces Maiden Sovereign Green Bonds; Check Auction Date, Tenure, Key Features


The Reserve Bank of India (RBI) has announced its maiden sovereign green bonds (SGrBs) and said these will be issued in two tranches for an aggregate amount of Rs 16,000 crore. The proceeds will be utilised for funding public sector projects seeking to reduce carbon emissions.

The first auction would be done on January 25 while the second on February 9, the RBI said in a statement. The proceeds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy, it said.

As announced in the Union Budget 2022-23, the central government as part of its overall market borrowings will be issuing Sovereign Green Bonds (SGrBs) for mobilising resources for green infrastructure.

These green bonds would be available in 5-year and 10-year tenures. The first tranche will be issued on January 25 for Rs 8,000 crore — Rs 4,000 crore each for 5 years and 10 years. The second tranche will be auctioned on February 9 for Rs 8,000 crore — Rs 4,000 crore each for 5 years and 10 years.

Features of Sovereign Green Bonds:

Issuance method: SGrBs will be issued through Uniform Price Auction.

Non-competitive bidding facility: 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’.

Eligibility for repurchase transactions (repo): SGrBs will be eligible for Repurchase Transactions (Repo) as per the terms and conditions mentioned in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time.

Eligibility for statutory liquidity ratio (SLR): SGrBs will be reckoned as an eligible investment for SLR purposes.

Underwriting: The underwriting in the auction of SGrBs by the Primary Dealers will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support” issued by the Reserve Bank vide circular No.RBI/2007-08/186 dated November 14, 2007, as amended from time to time.

When-issued trading: SGrBs will be eligible for “When Issued” trading in accordance with the guidelines on ‘Transactions in the When Issued market in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018, as amended from time to time.

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.

It was notified in the half-yearly issuance calendar for marketable dated securities for the second half of the fiscal year 2022-23 on September 29, 2022, that SGrBs for an aggregate amount of Rs 16,000 crore would be issued. The Government of India has since issued the Sovereign Green Bond Framework on November 9, 2022.

“The Government of India has since issued the Sovereign Green Bond Framework on November 9, 2022,” the RBI said.

Announcing the guidelines, Finance Minister Nirmala Sithraman in November had said the framework will strengthen India’s commitment towards the Nationally Determined Contribution (NDC) targets adopted under the Paris Agreement as well as help attract global and domestic investments into eligible green projects.

In her 2022-23 Budget speech in February last year, Sitharaman had announced that sovereign green bonds will be issued for mobilising resources for green projects. Prior to that, Prime Minister Narendra Modi in November 2021 had announced India’s commitments under ‘Panchamrit’ to reduce carbon emissions.

The proceeds from the green bonds issuance cannot be used for extraction, production and distribution of fossil fuels or where the core energy source is fossil-fuel based, and nuclear power projects.

All eligible green expenditures will include public expenditure undertaken by the government in the form of investment, subsidies, grants-in-aid, or tax foregone (or a combination of all or some of these) or select operational expenditures.

The framework applies to all sovereign green bonds issued by the government. Investors in the bonds issued under the framework do not bear any project-related risks.

(With Inputs From PTI)

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