Green Bond

Green Bond

Subject: Economy

Section: Economic Growth

Context:

Recently, the Finance Minister in the Budget 2022 announced that the government proposes to issue sovereign green bonds to mobilise resources for green infrastructure.

In 2007, green bonds were launched by few development banks such as the European Investment Bank and the World Bank. Subsequently, in 2013, corporates too started participating, which led to its overall growth.

Concept 

• A green bond is a debt instrument with which capital is being raised by companies, countries and multilateral organisations to exclusively fund projects that have positive environmental or climate benefits and provide investors with fixed income payments.
• These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.​
• Green bonds may come with tax incentives to enhance their attractiveness to investors.
• India’s first green bond was launched by Yes Bank Limited in 2015 to raise INR 5 billion to enhance long-term resources for funding infrastructure projects in renewable and clean energy projects such as wind, solar, biomass and hydropower.
• In January 2016, the Securities and Exchange Board (SEBI) of India published its official green bond guidelines and requirements for Indian issuers, placing India amongst a select set of pioneering countries who have developed national level guidelines.