Economics Current

Green Bonds

On April 2, 2020 State Bank of India (SBI) listed green bonds of USD 100 million (about Rs 750 crore) on its debt listing platform. The bank has listed green bonds of USD 100 million under its USD 10 billion global medium term note programme on India INX’s Global Securities Market Green Platform (GSM). According to the SBI chairman it is an extremely important transaction for the country especially in the critical covid situation. They believe it will reassure confidence in the country’s strength in the international bond market.
 
What is a green bond? A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.​ Green bonds are also referred to as climate bonds.
 
In 2007, green bonds were launched by banks like European Investment Banks and the World Bank. By 2013, corporates started participating in them. Yes Bank in India was the first to come out with a green bond in 2015. India, as per Economic survey 2019, is globally the 2nd largest market for green bonds. 
 
Importance of SBI’s green bond:
·The proceeds will be used to fund the non-conventional energy sector
·This is the 3rd set of green bonds the government-backed bank offered 
·The green bond framework has an objective to create a positive impact on the environment and this transaction is a step as part of our sustainability journey
·These funds can be invested in – renewable and sustainable energy; clean transportation; water management; waste management; biodiversity conservation; land use.



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