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Business News/ News / India/  RBI, govt working on issuing sovereign green bonds: Shaktikanta Das
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RBI, govt working on issuing sovereign green bonds: Shaktikanta Das

RBI governor Shaktikanta Das on Monday said, the issuance of green bonds provides a strong signal of a country’s commitment to a low-carbon economy.

The issuance of green bonds is part of the Union Budget 2022-23 announcement. (PTI)Premium
The issuance of green bonds is part of the Union Budget 2022-23 announcement. (PTI)

The Reserve Bank of India (RBI) and government is working on a framework to issue sovereign green bonds in line with global standards. RBI governor Shaktikanta Das on Monday said, the issuance of green bonds provides a strong signal of a country’s commitment to a low-carbon economy. The issuance of green bonds is part of the Union Budget 2022-23 announcement.

In his address at FIMMDA annual event in Mumbai, Das said, "issuance of green bonds provides a strong signal of a country’s commitment to a low-carbon economy," adding, "it also helps in bringing down the cost of capital for green projects."

He added, "Following the announcement in the Union Budget for 2022-23, the Government and the RBI are putting in place a framework for issuance of Sovereign Green Bonds, in line with global standards."

On February 1, Finance Minister Nirmala Sitharaman in her speech for Union Budget 2022-23 said, sovereign green bonds will be issued for mobilising resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.

Sovereign green bond issuance is part of the government's overall market borrowings in 2022-23.

Also, the RBI governor said, "the orderly development of the sovereign yield curve needs significant market liquidity at important benchmark tenor points and supply of G-Secs of various tenors to diverse class of market participants matching with their investment requirements."

Further, he added, "to this end, the Benchmark Security Issuance Strategy was introduced during 2020-21 under which government securities (gsecs) of specific benchmark tenors of 2, 5, 10, 14, 30 and 40-years are issued. This year, g-secs with a 7-year tenor have also been introduced after market consultation."

As part of RBI's continuing efforts to increase retail participation in G-secs, the central bank launched ‘RBI Retail Direct Scheme' in November last year to facilitate individual investors to conveniently invest in G-secs, state development loans (SDLs) and sovereign gold bonds.

Also, to ensure liquidity to the retail investor, the “Retail Direct Scheme - Market Making" was notified on January 04 this year. Das today said, "The scheme requires primary dealers to respond to buy/sell requests from the retail investors throughout market hours."

Das said, "The RBI has continuously engaged in ensuring state-of-the-art infrastructure for trading, settlement and timely dissemination of information in the g-sec market."

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Published: 05 Sep 2022, 08:42 PM IST
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