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23th February 2024 (9 Topics)

Green bond issuances fall in FY24

Context

Fundraising through green corporate bonds by companies and banks fell to a two-year low so far in the current financial year due to low investor appetite and little incentive for the issuers.

What are Green Bonds?

  • Category: Debt Instruments
  • Green bonds are fixed-income securities that are dedicated only to projects with environmental advantages or climate and environment-related objectives.

Green bonds differ from conventional fixed-income securities in one aspect that the issuer pledges to use the proceeds to finance projects meant for positive environmental or climate effects.

The numbers

  • Green bonds worth Rs 500 crore were issued so far in this financial year, as compared to Rs 739 crore in the previous financial year.
  • In the financial year 2021-22, green bonds worth Rs 2,677 crore were issued.

Why the low appetite?

  • In India, there is no obligation to invest in these green bonds and there are also no dedicated companies to invest in them. As a result, the appetite of the Indian investor for such bonds has been low.
  • Also, green bonds are new in India and hence, pricing based on the international issue of bonds becomes difficult.
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