RBI to start auction of sovereign green bonds

Proceeds from the auction, to be held on 25 January and 9 February, will be deployed in public sector projects that help in reducing the carbon intensity of the economy.

The RBI will sell two bonds maturing in five years and 10 years — worth ₹4,000 crore each — at both auctions.

The bonds will be issued through Uniform Price Auctions.

According to the auction calendar, 5% of the notified amount of sale will be reserved for retail investors and will be eligible for repurchase transactions (Repo).

These bonds will be considered eligible investments for Statutory Liquidity Ratio (SLR) purposes.

“Some of the foreign investors who have ESG scheme etc. may find it meaningful to invest in these papers. Since it’s a small quantum it is bound to sail through. We need to wait and see what kind and class of investors are participating. If response from global funds/investors are good, it will get fine pricing, otherwise it may get auctioned at par with prevailing G-sec levels,” said Ajay Manglunia, managing director, JM Financial.

The central government had announced the plan to issue sovereign green bonds in the budget of fiscal year 2023 as India attempts to tap the domestic debt market to finance green infrastructure projects.

The government had released the sovereign green bonds framework in November last year. A green finance working committee headed by the Chief Economic Adviser V Anantha Nageswaran will select public sector projects for green financing from those submitted by government departments.