Government has raised Rs 16,000 crore through Green Bonds this year

11 Nov 2022 , 08:23 AM

Regulation and government backing are required for India’s green bonds so that the number of issuers, grow and international ESG funds can invest heavily in such debt.

Through an auction of green bonds totalling Rs16,000 crore this year, the government chose to fund initiatives across nine broad categories.

On Wednesday, the finance ministry released a foundation for it. This would represent more than 1% of the Rs14.21 lakh crore in gross borrowing by the Centre.

Local dealers predict that such green bonds will yield less than the overall benchmark. Unless the Reserve Bank of India, the government’s merchant banker, issues an additional clause, a 10-year sovereign bond is anticipated to return at least 15 basis points less than the benchmark paper, which is now at 7.35%.

Foreign portfolio investors may have a designated allocation for money to be used for Environment, Social, and Governance (ESG) investments, but domestic institutional investors are not covered by this.

Even though they offer ESG funds, which are generally equities-focused, mutual funds do not manage any specific green bond portfolios.

According to reports, the Consolidated Fund of India would receive the revenues from the sale of sovereign green bonds and will only be used for green initiatives. After that, they will be made available for green initiatives that qualify.

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