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					</table><p>The government of India will seek to raise ₹200 billion (~$2.2 billion) by issuing Sovereign Green Bonds in the second half of the current financial year (FY) 2023-24.</p>
<p>The government had <a href="https://www.mercomindia.com/government-sale-maiden-%e2%82%b9160-billion-green-bonds" target="_blank" rel="noopener">raised</a> ₹160 billion (~$1.9 billion) worth of sovereign green bonds in two equal tranches in January and February this year.</p>
<p>Both the tranches comprised ₹40 billion (~$485.56 million) worth of bonds with a five-year tenor and a like amount of bonds with a ten-year tenor each.</p>
<p>This time around, the government plans to issue green bonds in tenors of up to 30 years. The auctions would be carried out in equal tranches of ₹50 billion (~600.85 million). The first auction will be held between November 6 and 10 for a tenor of five years, and the second between December 4 and 8 for a tenor of 10 years. The third auction will be held between January 15 and 19, 2024, and the fourth auction will be held between January 29 and February 2, 2024. The tenor for the third and fourth auctions will be 30 years.</p>
<p>The government will continue to exercise a greenshoe option to retain an additional subscription of up to ₹20 billion (~$240 million) against the securities.</p>
<p>In its half-yearly report on government finances, the Reserve Bank of India (<a href="https://www.rbi.org.in/" target="_blank" rel="noopener">RBI</a>) said it would <a href="https://mercomindia.com/government-raise-%e2%82%b9160-billion-green-bonds-fiscal-year/" target="_blank" rel="noopener">issue</a> green bonds in the last quarter of FY 2022-23. The government has said the bond proceeds would fund ‘green’ projects in the public sector to reduce the economy’s carbon intensity.</p>
<p>The proceeds from the bonds would go towards financing public projects across nine sectors, including renewable energy, climate change, sustainable water and waste management, clean transportation, and pollution control.</p>
<p>The central bank had issued a framework for sovereign green bonds under which it prioritizes investments in solar/wind/biomass /hydropower energy projects that integrate energy generation and storage.</p>
<p>The framework specifically excludes projects involving new or existing extraction, production, and distribution of fossil fuels, including improvements and upgrades, or where the core energy source is fossil-fuel-based.</p>
<p>With green bonds gradually gaining traction in India, the central bank had also in April <a href="https://www.mercomindia.com/reserve-bank-to-accept-green-deposits" target="_blank" rel="noopener">issued</a> a framework for financial institutions to offer ‘green deposits’ to customers, address ‘greenwashing’ concerns, and help augment the flow of credit to green activities and projects.</p>
<p>The framework seeks to foster the growth of the green finance ecosystem, which will apply to all regulated entities like scheduled commercial banks and deposit-taking non-banking financial companies. The framework took effect on June 1.</p>


Government to Issue ₹200 Billion Sovereign Green Bonds in Second Half of FY24


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					</table><p>NSE Indices, National Stock Exchange&#8217;s (<a href="https://www.nseindia.com/" target="_blank" rel="noopener">NSE</a>) subsidiary, has launched India&#8217;s first Sovereign Green Bond indices, which will track the performance of Indian Sovereign Green Bonds issued by the government recently.</p>
<p>These indices &#8211; Nifty India Sovereign Green Bond Jan 2028 Index and Nifty India Sovereign Green Bond Jan 2033 Index – will have a maturity date of January 31, 2028, and January 31, 2033, respectively.</p>
<p>Both indices have a base date of January 27, 2023, and a base value of 1,000. The indices will be reviewed monthly.</p>
<p>The government <a href="https://mercomindia.com/government-sale-maiden-%e2%82%b9160-billion-green-bonds/" target="_blank" rel="noopener">completed</a> the sale of its first-ever sovereign green bonds worth ₹160 billion (~$1.9 billion) in February this year in two tranches of equal amounts.</p>
<p>The yield on the five-year bond maturing in 2028 closed at 7.25%, and the 10-year bond maturing in 2033 closed at 7.34%. The Reserve Bank of India had set the cut-off yields at 7.23% and 7.29 % for the two bonds, respectively.</p>
<p>The first tranche of the green bonds worth ₹80 billion (~$970 million) was auctioned on January 25, 2023. The first installment yielded a slightly higher premium than the second one.</p>
<p>The government proposes to deploy the proceeds from the green bonds in public sector projects, which will help reduce the economy&#8217;s carbon intensity. It listed nine sectors, including climate change, sustainable water and waste management, clean transportation, renewable energy, and pollution control, that would benefit from the funds raised through green bonds.</p>
<p>Mukesh Agarwal, CEO of NSE Indices, said, &#8220;These indices are expected to act as a benchmark for asset managers and be a reference index tracked by passive funds in the form of Exchange Traded Funds (ETFs), index funds and structured products, which can provide fixed income investors efficient and cost-effective access to the Indian sovereign green bond market while making a positive impact on the society.&#8221;</p>
<p>Following the auction of the sovereign green bonds, the Indore Municipal Corporation also came out with a ₹2.44 billion (~$29.67 million) green bond issue in February. The bonds <a href="https://mercomindia.com/indore-municipal-corporation-%e2%82%b93-billion-green-bonds/" target="_blank" rel="noopener">received</a> an enthusiastic response from investors and raised over ₹3 billion (~$36.69 million).</p>
<p>The urban civic body intends to use the proceeds to fund a 60 MW ground-mounted captive solar photovoltaic project in the Khargone district in Madhya Pradesh.</p>
<p>Several corporate bodies have also been issuing green bonds to finance clean energy infrastructure projects, including solar and wind energy projects. After a review of the regulatory framework in the backdrop of increasing interest in sustainable finance in India and around the world, the market regulator Securities Exchange Board of India, recently <a href="https://mercomindia.com/regulator-issues-disclosure-norms-green-debt-securities/" target="_blank" rel="noopener">issued</a> a protocol for listing green debt securities.</p>


NSE Launches India’s first Sovereign Green Bond Indices


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					</table><p>The government completed the sale of ₹160 billion (~$1.9 billion) worth of sovereign green bonds, with the second tranche raising ₹80 billion (~$970 million) on Thursday.</p>
<p>Like in the first tranche, the second tranche comprised ₹40 billion (~$485.56 million) worth of bonds with a five-year tenor and a like amount of bonds with a ten-year tenor.</p>
<p>The yield on the five-year bond closed at 7.25%, and the 10-year bond closed at 7.34%. The Reserve Bank of India (<a href="https://www.rbi.org.in/" target="_blank" rel="noopener">RBI</a>) had set the cut-off yields at 7.23% and 7.29 % for the two bonds, respectively.</p>
<p>The first tranche of India’s debut sovereign green bonds worth ₹80 billion (~$970 million) were auctioned on January 25, 2023. The first installment yielded a slightly higher premium than the second one.</p>
<p>In its half-yearly report on government finances, the RBI had said it would <a href="https://mercomindia.com/government-raise-%e2%82%b9160-billion-green-bonds-fiscal-year/" target="_blank" rel="noopener">issue</a> the green bonds in the last quarter of the current fiscal year 2022-23. The government has said the bond proceeds would fund ‘green’ projects in the public sector to reduce the economy’s carbon intensity.</p>
<p>Meanwhile, the green bond to be issued by the Indore Municipal Corporation to <a href="https://mercomindia.com/indore-raise-%e2%82%b92-45-billion-through-green-bonds/" target="_blank" rel="noopener">raise</a> ₹2.45 billion (~$29.5 million) for a 60 MW ground-mounted captive solar photovoltaic project in Madhya Pradesh will go on sale on February 10. The issue will close on February 14. The tenor of the green municipal bonds will be for 3, 5, 7, and 9 years with a coupon rate of 8.25%.</p>
<p>This week, the central bank said that it recognizes that climate change can translate into climate-related financial risks for regulated entities which can have broader financial stability implications. To prepare a strategy based on global best practices for mitigating the adverse impacts of climate change, it circulated a discussion paper on climate risk and sustainable finance for public comments last year.</p>
<p>Based on the analysis of the feedback received, RBI said it would issue guidelines for regulated entities on the following in a phased manner:</p>
<ul>
<li>Broad framework for acceptance of green deposits</li>
<li>Disclosure framework on climate-related financial risks</li>
<li>Guidance on climate scenario analysis and stress testing</li>
</ul>
<p>Further, the Reserve Bank will have a dedicated webpage on its website to consolidate all instructions, press releases, publications, speeches, and related communication on climate risk and sustainable finance.</p>


Government Completes Sale of Maiden ₹160 Billion Sovereign Green Bonds


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					</table><p>The Reserve Bank of India (<a href="https://www.rbi.org.in/" target="_blank" rel="noopener">RBI</a>), in consultation with the government, has said it will issue the Sovereign Green Bonds (SGB) worth ₹160 billion (~$1.9 billion) in two tranches on January 25 and February 9.</p>
<p>The allocation of the bonds will be split between five and ten-year tranches, worth ₹40 billion ($485.56 million) each.</p>
<p>The proceeds of the bonds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.</p>
<p>In September last year, the RBI had on said that it would <a href="https://mercomindia.com/government-raise-%e2%82%b9160-billion-green-bonds-fiscal-year/" target="_blank" rel="noopener">issue</a> SGB for an aggregate amount of ₹160 billion (~$1.9 billion) in the financial year 2022-23. In November, the government issued the Sovereign Green Bond Framework.</p>
<p><strong>SGB Features </strong></p>
<p>The government had announced its intention to issue SGB in the Union Budget 2022-23.</p>
<p>The bonds will be issued through Uniform Price Auction and a non-competitive bidding facility. Under this, 5% of the notified amount of sale will be reserved for retail investors.</p>
<p>The bonds will also be eligible for repurchase transactions (repo) and be reckoned as eligible investments for statutory liquidity ratio (SLR) purposes.</p>
<p>The underwriting in the bond auction by the primary dealers will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support”.</p>
<p>The primary dealers will have to meet fresh underwriting commitments instead of the earlier requirements of bidding commitment and voluntary underwriting.</p>
<p>The bonds will also be eligible for trading in the secondary market.</p>
<p>SGB will be designated as specified securities under the ‘Fully Accessible Route’ for investment in government securities by non-residents.</p>
<p>The dates are tentative and subject to change if circumstances so warrant.</p>
<p>Earlier, the government-appointed agency CICERO Shades of Green, while <u><a href="https://mercomindia.com/agency-fears-indias-green-bonds-indirectly-support-coal/" target="_blank" rel="noopener">rating</a></u> the framework for the bonds ‘Good’ on the governance score, expressed fears they could be used to indirectly support coal firms.</p>
<p>A few other countries like Switzerland, Poland, and France have also issued sovereign green bonds to help enable them to transition to green economies.</p>


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