Home / Economy / RBI to auction green bonds in 2 tranches of 8,000 crore each in Jan, Feb

The Reserve Bank of India (RBI) will auction 16,000 crore of sovereign green bonds (SGrBs) in two tranches, the central bank announced on Friday. The RBI will auction 5-year and 10-year green bonds worth 4,000 crore each on 25 January and on 9 February, and this would be a uniform price auction, the central bank said.

“The Reserve Bank of India, in consultation with the Government of India, has decided to notify the indicative calendar for issuance of SGrBs for the fiscal year 2022-23," the RBI notification read.

In line with the ambition to significantly reduce the carbon intensity of the economy, the Union Budget for 2022-23 had mentioned about SGrBs.

Green bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects.

Green Bonds will help the government in tapping the requisite finance from potential investors for deployment in public sector projects aimed at reducing the carbon intensity of the economy.

The objective of Sovereign Green Bonds is to mobilise resources for green infrastructure as part of the government’s overall market borrowings in 2022-23, Union minister of state for Finance Pankaj Chaudhary had said in a written reply in the Rajya Sabha.

The features of the SGrB issuance will be as below:

i) Issuance Method: SGrBs will be issued through Uniform Price Auction.

ii) Non-competitive bidding facility: Five per cent of the notified amount of sale will be reserved for retail investors as specified under the ‘Scheme for Noncompetitive Bidding Facility in the auction of Government of India Dated Securities and Treasury Bills’.

iii) Eligibility for Repurchase Transactions (Repo): SGrBs will be eligible for Repurchase Transactions (Repo) as per the terms and conditions mentioned in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time.

iv) Eligibility for Statutory Liquidity Ratio (SLR): SGrBs will be reckoned as eligible investment for SLR purpose.

v) Underwriting: The underwriting in the auction of SGrBs by the Primary Dealers will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support" issued by the Reserve Bank vide circular No.RBI/2007-08/186 dated November 14, 2007, as amended from time to time.

vi) When-issued Trading: SGrBs will be eligible for “When Issued" trading in accordance with the guidelines on ‘Transactions in the When Issued market in Central Government Securities’ issued by the Reserve Bank of India vide circular dated July 24, 2018, as amended from time to time.

vii) Tradability: SGrBs will be eligible for trading in the secondary market.

viii) Investment by Non-residents: SGrBs will be designated as specified securities under the ‘Fully Accessible Route’ for investment in Government Securities by non-residents.

Meghna Sen
Meghna Sen is a deputy chief content producer at Livemint where she tracks companies, markets, news. She has 5+ years of experience with online and print publications. Email: meghna.sen@htdigital.in
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