Sovereign Green Bonds (SgrBs)

In News

• For the first-time, the Reserve Bank of India (RBI) will issue Sovereign Green Bonds (SgrBs) worth Rs 16,000 crore in two tranches of Rs 8,000 crore each in the current financial year.

About

• RBI will issue 5-year and 10-year green bonds of Rs 4,000 crore each on January 25 and February 9.
• The framework for the sovereign green bond was issued by the government in November 2022

What are Green Bonds?

• Green bonds are bonds issued by any sovereign entity or corporates whose proceeds are utilised for funding environmentally sustainable projects such as renewable energy, clean transportation, energy efficiency, sustainable water and waste management etc.
• The only difference between Green Bonds and other ordinary government-issued bonds is that the funds raised from investors are only used to support initiatives that have a good influence on the environment.

Significance

• Green Bonds have emerged as an important financial instrument to deal with the threats of climate change.
• They offer investors a platform to engage in good practices while achieving at least similar, if not better, returns on their investment.

Source: LM