The RBI on Friday said maiden Sovereign Green Bonds (SGrBs) would be issued in two tranches for an aggregate amount of Rs 16,000 crore, and proceeds will be utilised for funding public sector projects seeking to reduce carbon emissions.
The first auction would be done on January 25 while the second on February 9, the Reserve Bank of India (RBI) said in a statement.
The proceeds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy, it said.
As announced in the Union Budget 2022-23, the central government as part of its overall market borrowings will be issuing Sovereign Green Bonds (SGrBs) for mobilising resources for green infrastructure.
"Accordingly, it was notified in the half-yearly issuance calendar for marketable dated securities for the second half of the fiscal year 2022-23 on September 29, 2022, that SGrBs for an aggregate amount of Rs 16,000 crore would be issued.
"The Government of India has since issued the Sovereign Green Bond Framework on November 9, 2022," it said.
These green bonds would be available in 5-year and 10-year tenure, it added.
SGrBs will be issued through uniform price auction and 5 per cent of the notified amount of sale will be reserved for retail investors, the RBI said, adding these papers will be reckoned as an eligible investment for SLR purposes.
"SGrBs will be eligible for Repurchase Transactions (Repo) as per the terms and conditions mentioned in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time," it noted.
These bonds will be eligible for trading in the secondary market.
Announcing the guidelines, Finance Minister Nirmala Sithraman in November had said the framework will strengthen India's commitment towards the Nationally Determined Contribution (NDC) targets adopted under the Paris Agreement as well as help attract global and domestic investments into eligible green projects.
The proceeds from the green bonds issuance cannot be used for extraction, production and distribution of fossil fuels or where the core energy source is fossil-fuel based, and nuclear power projects.
All eligible green expenditures will include public expenditure undertaken by the government in the form of investment, subsidies, grants-in-aid, or tax foregone (or a combination of all or some of these) or select operational expenditures.
In her 2022-23 Budget speech in February last year, Sitharaman had announced that sovereign green bonds will be issued for mobilising resources for green projects.
Prior to that, Prime Minister Narendra Modi in November 2021 had announced India's commitments under 'Panchamrit' to reduce carbon emissions.
The framework applies to all sovereign green bonds issued by the government.
Investors in the bonds issued under the framework do not bear any project-related risks.
