In the Union Budget 2022-23, Finance Minister announced the issue of Sovereign Green Bonds for mobilizing resources for green infrastructure which shall be deployed in public sector projects to help reduce the carbon intensity of the economy.
What are Sovereign Green Bonds?
Green bonds issued by the Government of India are similar to other debt instruments, with one key distinction, the issuer commits to utilize the funds raised specifically for financing projects that contribute positively to the climate and environment.
Sovereign Green Bonds debuted in the Indian market on Jan 25, 2023, the Indian government raised 80 billion worth of 10-year and 5-year green bonds in its first tranche of Green Bond issuance.
How are Green bonds different from Conventional bonds?
In the case of conventional bonds, the proceeds can be utilized for a wide range of purposes as determined by the issuer. However, in the case of green bonds, the proceeds are specifically designated for financing green projects or initiatives that have a positive impact on the environment.
Issuers of green bonds are also required to provide detailed information about the specific project they intend to finance, including its anticipated climate and environmental benefits. This ensures transparency and accountability in the use of funds raised through green bonds.
How can Investors purchase Green Bonds on Kite?
Green bonds are classified as Government securities, and investors can participate in bidding for these bonds on Kite through the “Bids” section on the Kite web platform. Currently, green bonds are exclusively accessible on Kite Web, but they will also be made available on the app once the next app update is released.
Bidding for Green Bonds on Kite is open from Tuesday at 10 AM until Thursday at 6 PM. The processing of these bids takes place on the National Stock Exchange (NSE) at 6 PM on the closing date. The funds for the orders placed will be debited from the trading account by the end of the last bidding day. The bid window provides updated information on the settlement time of the bids and the maturity details.
Within the order window, users will have the option to enter the desired investment amount. The corresponding number of units that can be purchased will be displayed at the bottom left, adjacent to the ‘Place Bid’ button.
For example: In the provided screenshot, an amount of Rs. 21,200 has been entered, and the visible information indicates that 200 units can be bought.
When and how investors receive interest by investing in SGrBs?
Sovereign Green Bonds (SGrBs) pay a fixed interest rate that is paid out every 6 months and credited to the investor’s bank account. The principal is paid upon maturity of the bond.
Can SGrBs be pledged as collateral?
Once the securities are approved by the Clearing corporation, SGrBs can be pledged and are considered as cash equivalent.
gov should give more for green bonds as it helps gov achieve its goal.
