The central bank will sell two bonds maturing in five years and 10 years, worth Rs 4,000 crore each, at every auction.
The Reserve Bank of India (RBI) on January 6 said that it will issue Sovereign Green Bonds worth Rs 8,000 crore each in two tranches on January 25 and February 9.
“The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy,” the RBI said in a release.
The RBI will sell two bonds maturing in five years and 10 years worth, Rs 4,000 crore each, at every auction.
Sovereign green bonds will be issued through Uniform Price Auctions.
As per the release, 5 percent of the notified amount of sale will be reserved for retail investors and it will be eligible for Repurchase Transactions (Repo).
These bonds will be reckoned as eligible investments for Statutory Liquidity Ratio (SLR) purposes.
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The underwriting for these in the auction by primary dealers will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support” issued by the RBI.
The government, in the second half borrowing calendar, had announced raising Rs 16,000 crore through sovereign green bonds, which will be part of the overall Rs 5.92 lakh crore borrowing in the second half.
Further, the government announced the framework for sovereign Green Bonds last year in November, with a committee headed by the chief economic adviser being put in place to select eligible projects for financing, which do not include large hydropower plants.
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As per the framework, the payment of principal and interest on the green bonds will not depend on the performance of the eligible projects. As such, investors will not bear any project-related risks.
“The eligible expenditures are limited to government expenditures that occurred a maximum of 12 months prior to issuance. It will be endeavored that all the proceeds get allocated to projects within 24 months following issuance,” the framework said.