Sovereign Green Bonds(RBI)

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In this post we will understand the term Sovereign Green Bonds, what they are, what they mean for, how they impact the environment.

Recently, RBI (Reserve Bank of India) announced that they will for the first time issue Sovereign Green Bonds(SGrBs) amounting worth Rs 16000 crore in two shifts of Rs 8000 crore each in the on going financial year. The Central also announced that they will issue 5 year and 10 year green bonds of value Rs 4000 crore each on this January 25 and Feb 9 2023.

What are Sovereign Green Bonds?

Sovereign Green bonds are bonds issued by any sovereign entity, inter-governmental groups or Alliance, and Corporates that has the aim to provide fund utilisation based on environmentally sustainable objectives.

The Frameworks for the sovereign bonds were issued by the Central government on November 9 2022.

What is the importance of sovereign green bonds?

For the recent few years it has been observed that green bonds have emerged as an important financial instrument to deal with the crisis related to climate change and challenges. According to the International Finance Corporation(IFC) , the World Bank group’s institution, there is a risk for climate change and economics and also threatens communities related to agriculture, food and water supplies.


is a need for a large amount of finances to redress these challenges- it is critical to channelise the capital towards sustainable development and connect the environmental projects with the capital market and investors. Green bonds are the easiest method to do so.

How are investors benefited from Sovereign Green bonds?

Sovereign green bonds give opportunities to the investors to engage in good practice, influencing the business strategy for Bond issues. Green bonds provide a better investment not as in form of returns but also in form of goodwill for their respective forms. Thus investing in green bonds gives the investors an opportunity to invest in a low carbon emitting project as per the IFC.

What are the plans for issuing the green bonds by the government?

In last year August, the government took a stand and committed to reduce the emission intensity of GDP- emission per unit GDP by 45% from 2005 levels by 2030, and achieve about 50% cumulative electric power installed capacity from non fossil fuel based energy resources by 2030. In view of this commitment to significantly reduce the carbon intensity of the economy the union budget 2022-23 made an announcement on issuing sovereign green bonds.

The current situation in the country’s climate actions have been financed through domestic resources. It is now targeting the generation of additional global financial resources. By issuing the sovereign green bonds the Indian government will get the help to tap the requisite finance from the potential investors for deployment in a public sector project aimed to reduce the carbon intensity of the economy.

Where will the amount be invested?

The government will use the amount from the sovereign green bonds to finance expenditure(in part or whole) for various green projects including in Renewable Energy, clean transportation, Energy Efficiency, climate change adoption, sustainable water and waste management, pollution and prevention control and green buildings.

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