Government to Issue ₹200 Billion Sovereign Green Bonds in Second Half of FY24

Earlier this year, India had raised ₹160 billion in green bonds in two tranches

September 27, 2023


The government of India will seek to raise ₹200 billion (~$2.2 billion) by issuing Sovereign Green Bonds in the second half of the current financial year (FY) 2023-24.

The government had raised ₹160 billion (~$1.9 billion) worth of sovereign green bonds in two equal tranches in January and February this year.

Both the tranches comprised ₹40 billion (~$485.56 million) worth of bonds with a five-year tenor and a like amount of bonds with a ten-year tenor each.

This time around, the government plans to issue green bonds in tenors of up to 30 years. The auctions would be carried out in equal tranches of ₹50 billion (~600.85 million). The first auction will be held between November 6 and 10 for a tenor of five years, and the second between December 4 and 8 for a tenor of 10 years. The third auction will be held between January 15 and 19, 2024, and the fourth auction will be held between January 29 and February 2, 2024. The tenor for the third and fourth auctions will be 30 years.

The government will continue to exercise a greenshoe option to retain an additional subscription of up to ₹20 billion (~$240 million) against the securities.

In its half-yearly report on government finances, the Reserve Bank of India (RBI) said it would issue green bonds in the last quarter of FY 2022-23. The government has said the bond proceeds would fund ‘green’ projects in the public sector to reduce the economy’s carbon intensity.

The proceeds from the bonds would go towards financing public projects across nine sectors, including renewable energy, climate change, sustainable water and waste management, clean transportation, and pollution control.

The central bank had issued a framework for sovereign green bonds under which it prioritizes investments in solar/wind/biomass /hydropower energy projects that integrate energy generation and storage.

The framework specifically excludes projects involving new or existing extraction, production, and distribution of fossil fuels, including improvements and upgrades, or where the core energy source is fossil-fuel-based.

With green bonds gradually gaining traction in India, the central bank had also in April issued a framework for financial institutions to offer ‘green deposits’ to customers, address ‘greenwashing’ concerns, and help augment the flow of credit to green activities and projects.

The framework seeks to foster the growth of the green finance ecosystem, which will apply to all regulated entities like scheduled commercial banks and deposit-taking non-banking financial companies. The framework took effect on June 1.