RBI to issue green bonds in two tranches of Rs 8,000 crore each

Tags: Economy/Finance National News

The Reserve Bank of India on 6 January said that maiden Sovereign Green Bonds (SGrBs) would be issued in two tranches of Rs 8,000 crore each on January 25 and February 9.

An overview of the news 

• The central government is issuing these sovereign green bonds as part of its total market borrowing. These bonds are being issued to promote green infrastructure.

• The Central Government had released the framework of Sovereign Green Bond on 9 November 2022.

• Sovereign green bonds worth Rs 8000 crore will be issued on January 25, 2023. In this, green bonds worth Rs 4000 crore will be issued for 5 years and sovereign green bonds worth Rs 4000 crore will be issued for 10 years.

• Apart from this, Sovereign Green Bonds worth Rs 8000 crores will be issued as the next instalment on 9 February 2023. In which green bonds worth Rs 4000 crore will be issued for 5 years and sovereign green bonds worth Rs 4000 crore will be issued for 10 years.

What are Sovereign Green Bonds?

• These are bonds that are used by the government to finance projects that have a positive impact on the environment.

• The Green Bond was launched in 2007 by the European Investment Bank and the World Bank.

• A Green Bond is an instrument that helps in raising funds for green projects.

• Funds from these bonds will be invested in public sector projects that help reduce carbon intensity.

• These bonds fall into 9 broad categories. Some of these are projects like renewable energy, energy efficiency, clean transportation, green building.

• The government aims to attract foreign investors through these bonds.

• Being asset linked, it becomes easier for the government to raise money through these bonds.