Sovereign Green Bonds
The Reserve Bank of India (RBI) has made a significant move to expand the scope of sustainable finance by permitting investment and trading of Sovereign Green Bonds (SGrBs) at the International Financial Services Centre (IFSC) in Gandhinagar, Gujarat.
Government’s Commitment to Green Financing
The government’s issuance of Sovereign Green Bonds (SGrBs) in January 2023, as outlined in the Union Budget for 2022-23, laid the groundwork for promoting sustainable investment opportunities in the financial market. With this recent announcement, the RBI aims to further enhance the accessibility of green bonds to a broader pool of investors.
Enabling Non-Resident Participation
RBI Governor Shaktikanta Das emphasized fostering broader non-resident participation in SGrBs to bolster sustainable financing initiatives. Eligible foreign investors in the IFSC will now have the opportunity to invest in Sovereign Green Bonds, expanding the avenues for international investment in environmentally responsible projects.
Regulatory Framework for Sustainable Investment
A specialized scheme for investment and trading in SGrBs by eligible foreign investors in IFSC is set to be notified separately in consultation with the government and the IFSC Authority. This regulatory framework aims to provide clarity and transparency in facilitating sustainable investment practices within the financial ecosystem.
Government’s Borrowing Plans for Green Bonds
In alignment with its commitment to green financing, the government plans to raise Rs 12,000 crore by issuing Sovereign Green Bonds (SGrBs) in the first half of the financial year. This initiative is part of the broader objective to meet the gross market borrowing target of Rs 14.13 trillion for 2024-25, with a significant portion earmarked for green initiatives.
IFSC Gandhinagar: A Hub for Sustainable Finance
The inclusion of IFSC Gandhinagar as a platform for trading and investment in Sovereign Green Bonds reinforces its position as a pioneering international financial services center in India. This move enhances IFSC’s attractiveness to global investors and underscores India’s commitment to promoting sustainable development on a global scale.
Paving the Way for Sustainable Finance
The RBI’s decision to permit investment and trading of Sovereign Green Bonds at Gujarat IFSC signifies a crucial step towards mainstreaming sustainable finance in India. This initiative is poised to accelerate the transition towards a greener and more resilient economy by providing a conducive regulatory environment and expanding investment opportunities.
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