India's PFRDA approves Sovereign Green Bonds for pension funds
Tags: Environment
The Pension Fund Regulatory and Development Authority (PFRDA) in India approved the inclusion of Sovereign Green Bonds (SGBs) in pension funds.
An Overview of the News
These bonds issued by the government will be used to finance projects focused on environmental initiatives.
Significance of PFRDA's investment in Sovereign Green Bonds:
Advancing Sustainable Projects: The decision to allow pension funds to invest in SGBs facilitates direct allocation of funds to environmentally beneficial projects, thereby contributing to India's sustainable development objectives.
Environment-friendly pension portfolio: Allowing pension funds to include SGB in their investment portfolio diversifies their holdings and aligns with the growing demand for investments that are socially responsible and environment-friendly.
Government's commitment to the environment: Issuance of Sovereign Green Bonds reflects the government's commitment to address environmental challenges and promote a green economy.
Raising awareness about sustainable investing: The inclusion of sovereign green bonds in pension funds can raise awareness among retail investors about the importance of sustainable investing. As a result, it encourages a more informed and socially responsible approach to financial decision making.
Sovereign Green Bond:
These are bonds issued by governments that are designed to finance projects related to the environment and climate.
These bonds provide investors with an opportunity to earn returns backed by a government guarantee, thereby adding a sense of security to their investments.
The main purpose of Sovereign Green Bonds is to finance initiatives and projects that aim to address environmental challenges and promote sustainability.
Governments issue these bonds specifically to raise money for environmental projects, as a sign of their commitment to tackling climate issues and promoting green initiatives.
Green bonds are a type of debt security that helps raise capital for projects that have a positive impact on the environment or contribute to climate change mitigation and adaptation efforts.
About Pension Fund Regulatory and Development Authority (PFRDA)
It is responsible for regulating pensions in India and was established in 2003 under the Ministry of Finance.
The main objective of PFRDA is to promote old age income security and protect the interests of National Pension System (NPS) subscribers.
Deepak Mohanty is the chairman of the Pension Fund Regulatory and Development Authority.
National Pension System (NPS) in India:
It is a defined-contribution pension system which comes under the purview of PFRDA.
NPS was created under the Indian Trust Act 1882 to effectively manage the assets and funds of the scheme in the best interest of its subscribers.
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