NABARD to issue social bonds

Subject: Economy

Section: Monetary Policy

In News: Nabard to list Social Bonds under sustainability bond framework.

Key Points:

In a first-of-its-kind borrowing instrument, the National Bank for Agriculture and Rural Development (NABARD.) has said it will be listing the first of its social bonds on September 29 with a size of Rs 3,000 crore.
This is the first such issue by an AAA-rated entity. It will be followed by sustainability and green bonds.
The bank recently announced a Sustainability Bond Framework:
- It seeks to finance and refinance new or existing eligible green and social projects.
- The key criteria to make a project eligible to get financing from green bonds include
  - contribution to the environment to mitigate climate change effects,
  - conservation of natural resources and biodiversity, and
  - prevention and control of pollution.
Projects that promise energy efficiency, including green buildings, energy storage, and smart grids, would also be eligible to get funding through the new breed of bonds that NABARD. is rolling out.
In the social sphere, ventures that fall into the categories:
- affordable basic infrastructure ;
- access to essential services (health, education, and vocational training);
- food security, and employment generation.

NABARD

It is an apex development and specialized bank established on 12 July 1982 by an act by the parliament of India.
Its main focus is to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector.
It was established based on the recommendations of the Committee set up by the Reserve Bank of India (RBI) under the chairmanship of Shri B. shivaraman.
It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC).
It has been accredited with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”.
The Reserve Bank of India (RBI) recently sold its entire stakes in the National Bank for Agriculture & Rural Development (NABARD) and National Housing Bank.
The decision to divest its entire stake was taken based on the recommendations of the second Narasimham Committee. The government now holds a 100 per cent stake in both NHB and NABARD.