Reserve Bank of India Says No Foreign Investment Cap on Sovereign Green Bonds: The sovereign green bonds issued by the Indian government will not have any restrictions on foreign investment, the Reserve Bank of India said. Such securities will be counted as specified securities under the fully accessible route, the central bank said in a notification. Earlier this month, the RBI had announced a two-tranche auction of sovereign green bonds for 160 billion rupees ($1.93 billion).
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More About This Move:
The fully accessible route (FAR) introduced by RBI wherein certain specified categories of Central Government securities are opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well. Now, the central bank has added sovereign green bonds to the list too.
Significance of Sovereign Green Bonds:
- SGrBs will be issued through Uniform Price Auction.
- Retail investors will be given 5% of the announced amount for sale.
- SGrBs will be eligible for trading in the secondary market.
- For the purposes of SLR, SGrBs shall be considered eligible investments.
Benefits of Sovereign Green Bonds:
Issuance of SGrBs is expected to support 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. Investors that purchase bonds under the SGrB framework are not at risk for any project-related issues. The Centre is committed to reducing the Emissions Intensity of its GDP by 45% by 2030, from the 2005 level, and achieving about 50% cumulative electric power installed capacity from nonfossil fuel-based energy resources by 2030.