RBI to Auction First Tranche of Green Bonds Worth ₹80 Billion on January 25

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The government has announced the sale of sovereign green bonds (SBG) worth ₹80 billion (~$986 million) through an auction by the Reserve Bank of India, Mumbai, on January 25.

The auction will be in two parts of ₹40 billion ($485.56 million) each. The first one is for ‘New GOI SGrB 2028’ (5-year tenure), and the second is ‘New GOI SGrB 2033’ (10-year tenure) through a yield-based uniform price method.

The proceeds of the bonds will be deployed in public sector projects which help reduce the economy’s carbon intensity.

The government will have the option to retain additional subscriptions up to ₹20 billion (~$242 million) against each of the two securities.

The Finance Ministry said that up to 5% of the notified amount of the sale of the securities will be allotted to eligible individuals and institutions as per the program for Non-Competitive Bidding Facility in the Auction of Government Securities.

Both competitive and non-competitive bids for the auction must be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on January 25. The non-competitive bids should be submitted between 10.30 AM and 11.00 AM and the competitive bids should be submitted between 10.30 AM and 11.30 AM.

The result of the auctions will be announced on the same day. Payments by the successful bidders will have to be made on January 27.

Following up on the government’s expression of intent to issue SGBs in the Union Budget 2022-23,  the RBI subsequently said it would issue the SGBs worth ₹160 billion (~$1.9 billion) in two tranches on January 25 and February 9, 2023.

The allocation of the bonds will be split between five and ten-year tranches worth ₹40 billion ($485.56 million) each.

Last November, the government announced the Sovereign Green Bond Framework, which was rated ‘Good’ on the governance score by an agency appointed by it. The agency, CICEO Green Shades of Green, had identified a few pitfalls in the SGB framework and warned investors about them in its report.

Specifically, the report had pointed out that subsidies to support the expansion of renewable energy such as wind and solar power could be given to large power generation companies that are heavily involved in coal-based power generation.

However, the government clarified that expenditures that indirectly support coal-fired power plants, such as energy efficiency measures at such facilities, would not be financed.