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
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. The first tranche of SGrBs worth Rs 8,000 crore was subscribed fully on Wednesday. The second auction of another Rs 8,000 crore will be conducted on February 9.
As per the auction details provided by the Reserve Bank of India (RBI), SGrB 2028 maturing in 2028 will have a coupon rate of 7.10, while SGrB 2033 maturing in 2033 will carry a rate of 7.29 per cent.
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.
Coupon rates of Sovereign Green Bonds are very much in line with the Government Securities (G-Sec). SGrBs will be issued through uniform price auction and 5 per cent of the notified amount of sale will be reserved for retail investors, the RBI said, adding these papers will be reckoned as an eligible investment for SLR purposes. These bonds will be eligible for trading in the secondary market.