Green bonds are fixed-income securities used to finance environmental and climate change initiatives. A framework for issuing sovereign green bonds following international norms is being developed by the Reserve Bank of India (RBI) and the Indian government. The Climate Bonds Initiative (CBI), the International Capital Market Association (ICMA), the European Union, and the Chinese government are some of the leading organizations that have developed criteria to systematize what should be referred to as “green investments.”
Shaktikanta Das, governor of the RBI, recently commented in his speech at the FIMMDA annual conference in Mumbai that the issuing of #greenbonds sends a clear message about a nation’s commitment to a low-carbon economy. The Union Budget 2022–23 announcements also include information about the issue of green bonds.
In her address for the Union Budget 2022–23 on February 1, Finance Minister Nirmala Sitharaman said that sovereign green bonds would be issued to raise money for green development. The funds raised will be used for government initiatives that lower the economy’s carbon footprint. In 2022–2023, the government will issue sovereign green bonds as part of its overall market borrowings.
According to Das, “the Government and the RBI are putting in place a framework for issuance of Sovereign Green Bonds, in line with global norms, following the declaration in the Union Budget for 2022–23.”
In November of last year, the central bank introduced the “RBI Retail Direct Scheme” to make it easier for private investors to invest in G-secs, state development loans (SDLs), and sovereign gold bonds. This was done as part of RBI’s ongoing efforts to encourage retail participation in G-secs.
At the beginning of 2022, the global market for green bonds, commonly referred to as “climate bonds,” was worth US$1.5 trillion. Green bonds offer appealing choices for refinancing and financing climate projects in numerous sectors. When cities try to stimulate private funding for climate projects, the green bond market should be considered.