Green Bonds – UPSC Prelims

Bonds are debt instruments which are issued to raise capital and investor gets fixed return.

Green bond is a type of bond in which capital thus raised is used to fund green projects relating to renewable energy or emission reductions etc.

Green bonds typically come with tax incentives to enhance their attractiveness to investors.

The World Bank issued the first official green bond in 2009.

Yes Bank was the first Indian Bank to issue Green Infrastructure Bonds (GIBs) in India in 2015.

The issuance of sovereign green bonds is going to be part of the Indian government’s overall borrowing programme.

A sovereign green bond can provide a strong signal of the country’s commitment to a low-carbon economy while also helping bring down the cost of capital for green projects.

SEBI has allocated the following eight categories with the tag of green projects:

Green bonds constituted only 0.7% of all the bonds issued in India since 2018.

The average coupon rate for green bonds in India with maturities between 5 to 10 years has generally remained higher than the corporate and government bonds with similar tenure.

Better information management system in India may help in reducing maturity mismatches, borrowing costs and lead to efficient resource allocation in Green Bonds.