The government began the sale of its Sovereign Green Bonds (SGrBs) worth Rs 8,000 crore today, January 25, 2023. The auction will be conducted through multiple price-based methods.
In a circular, the Reserve Bank of India (RBI) notified that the primary dealers (PDs) can submit their bids for the Additional Competitive Underwriting (ACU) auction “electronically through Core Banking Solution (E-Kuber) System between 09.00 am and 09.30 am on the day of underwriting auction. The underwriting commission will be credited to the current account of the respective PDs with RBI on the day of issue of securities.”
Earlier this month, the apex bank had said in a statement that the maiden Sovereign Green Bonds auction proceeds would be deployed in public sector projects which help in reducing the carbon intensity of the economy. The RBI statement had noted that as announced in the Union Budget 2022-23, Government of India, as part of its overall market borrowings, would be issuing the Sovereign Green Bonds for mobilising resources for green infrastructure.
“Accordingly, it was notified in the half-yearly issuance calendar for marketable dated securities for the second half of the fiscal year 2022-23 on September 29, 2022 that SGrBs for an aggregate amount of Rs 16,000 crore would be issued. The Government of India has since issued the Sovereign Green Bond framework on November 9, 2022,” the RBI said. These green bonds would be available in five-year and 10-year tenure.
Earlier, the Department of Economic Affairs said the “Framework for Sovereign Green Bonds,” which states that these bonds would help Government of India (GoI) in tapping the requisite finance from potential investors for deployment in public sector projects aimed at reducing the carbon intensity of the economy.
“This Green Bond Framework sets forth the obligations of the Government of India as a Green Bond issuer. The Framework applies to all sovereign Green Bonds issued by the Government of India. Payments of principal and interest on the issuances under this Framework are not conditional on the performance of the eligible projects,” it said.
Investors in bonds issued under this would not bear any project related risks, it said, adding that the “Department of Economic Affairs, Ministry of Finance, reserves the right to modify this framework according to international best practices or in accordance with the government of India ’s international commitments and environmental priorities.”
Additionally, it highlighted that any changes to the “Framework will be reviewed by an independent provider. The framework is designed to comply with four components and key recommendations of the International Capital Market Association (ICMA) Green Bond Principles (2021)3. These principles recommend delineation of a clear process and disclosure by
the issuer to enable the investors and banks and others to understand the characteristics of the green bond.”