Government to bring in framework in 2 weeks for maiden issuance of sovereign green bonds

The government is planning to bring in a framework for its maiden issuance of sovereign green bonds in two weeks. However, it is not going to extend tax incentives to woo investors, as told by sources to Financial Express. The cost of borrowing via green bonds may be lower than the G-sec rates of comparable tenure, according to one of the sources. The Centre intends to raise Rs 16,000 crore via such bonds in the second half of FY23, as announced by the Finance Ministry in September this year. The proceeds are going to be utilised by the government for spending on extant and new green projects executed by various departments. According to reports, the framework developed by the Ministry of Finance is currently being vetted by CICERO, the leading global independent reviewer of green bond investment architecture, as part of a second-party review. What are green bonds? A green bond is basically a fixed-income instrument, like the regular corporate or government bond, but it is issued for raising capital specifically for environmental or climate-related projects. This specific utilisation of the funds distinguishes green bonds from regular bonds. While introducing the Budget for FY23, Finance Minister Nirmala Sitharaman announced the launch of such bonds to mobilise resources for green infrastructure. The government had also sought technical assistance from the World Bank for this purpose, which has issued over 200 such bonds since 2008. After the framework is put forward, the Reserve Bank of India (RBI) will give details of the timing of the issuance and the tenor of the bonds, on the basis of feedback from investors. According to one of the sources quoted in the Financial Express, the inclusion or size of green bonds in the FY24 Budget and the borrowing calendar will depend on its performance this fiscal. As per one of the sources, the government is going to adhere to utmost transparency in reporting the spending of the amount raised through this route, which is a crucial condition put forward by investors when they pick such bonds. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.