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Committee formed by IFSCA on ‘sustainable finance’
Context
The GIFT City had constituted a committee to file a report on sustainable finance. The panel had given the report to International Financial Services Centres Authority to align the IFSCA regulations with international best practices.
Key Suggestions of the Committee:
- The committee was exploring ways in which capital flows through IFSC can be enhanced and support the development of innovative financial products in the area of green and sustainable finance.
- The recommendations by the committee were in the areas including;
- sustainable green,
- green products,
- issuance of sovereign green,
- green bonds via IFSC,
- innovative sustainable finance products,
- voluntary carbon market,
- sustainable finance for micro small & medium enterprises (MSMEs),
- enabling de-risking mechanisms,
- Developing a voluntary carbon market and promoting green fintech.
How the sustainable planning is helpful?
- Sustainable green products are used to raise money to finance new or refinance existing, green projects or activities.
- The money raised must be used for these activities, which can be for environmental and social benefits such as greenhouse gas emission reductions or biodiversity conservation.
- The issuance of sovereign green bonds through IFSC would further validate the green bond market, leading to stronger bids, larger order books, increased pricing leverage and a higher quality investor’s base.
- In addition to this, enabling sovereign masala bond issuances to be listed at IFSC to broaden the investor base for India’s sustainability transition without taking on currency risk.
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What are Green Bonds?
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Significance of Sustainable Bonds:
- The voluntary carbon market enables individuals, governments, NGOs, and businesses to voluntarily purchase carbon credits to offset their investments.
- Credit carbon market deals in the sale and purchase of carbon credits in spot and derivative markets.
- These markets are created to help companies reduce greenhouse gas (GHG) emissions at a lower price.
About International Financial Services Centres Authority (IFSCA)
- The IFSCA is a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in
- At present, the GIFT IFSC is the maiden international financial services centre in India.
- It is headquartered in Gandhinagar. Its current chairman is Injeti Srinivas.
- Role: The International Financial Services Centre(IFSC) caters to customers outside the jurisdiction of the domestic economy.
- Such centres deal with flows of finance, financial products and services across borders.
- London, New York and Singapore can be counted as global financial centre.
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