Sovereign Green Bonds

Why in news?

• The RBI would issue Sovereign Green Bonds (SGrBs) in two tranches of ?8,000 crore each on January 25 and February 9.

About Sovereign Green Bonds:

• Green bonds are an instrument to raise money, at a lower cost than regular bonds, for environment-friendly projects.
• The concept goes back only 15 years when a group of Swedish pension funds wanted to invest in green projects as climate worries grew.
• A sovereign green bond is a debt instrument issued by the central or state government to borrow money from investors with the commitment that the mobilized fund will be spent on climate or eco-system related activities.

Add ons:

• Yes Bank was the first Indian Bank to issue Green Infrastructure Bonds (GIBs) in India in 2015.
• Corporates have been issuing green bonds in India for a few years, but the country’s global share stood at just 1% in the first half of 2022.

PRACTICE QUESTION:

Consider the following statements:

1. India is the first country in the world to issue sovereign green bonds

2. In India, private players cannot issue green bonds

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer