RBI announces green bonds auction

The Reserve Bank of India (RBI) announced that it will auction Rs 160 billion in sovereign green bonds in two tranches in the Indian government’s first-ever such debt sale to raise funds for clean-energy projects. The proceeds will be used to fund solar power projects, followed by wind and small hydro projects and other public sector projects which help in reducing the carbon intensity of the economy.

The RBI will hold a uniform price auction for 5 year and 10-year green bonds worth Rs 40 billion each on January 25, 2023, and February 9, 2023. According to the Indian government, the committee’s decision will be guided by environmental experts and representatives from the Ministry of Environment, Forests, and Climate Change.

Each year, the committee will identify new projects and ensure that the proceeds of the bond sales are allocated within 24 months of the date of issuance. Green bond investments may qualify for the statutory liquidity ratio (SLR), which is the minimum percentage of deposits that commercial banks must invest in liquid assets such as government bonds. Green bonds will also be designated as specified securities under the ‘Fully Accessible Route’ for foreign investors, which allows for unlimited investment.