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Question

Which of the following statements is/are correct with reference to the green bonds?

A A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.
B According to a study by Reserve Bank of India (RBI), Green bonds constituted only 10 percent of all the bonds issued in India since 2018.
C Both A & B
D None of these
Answer & Explanation
Option: A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.

Explanation:

The cost of issuing green bonds has generally remained higher than other bonds in India, largely due to asymmetric information. The average coupon rate for green bonds issued since 2015 with maturities between 5 to 10 years have generally remained higher than the corporate and government bonds with similar tenure. A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.
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