Published: 4th Mar, 2024
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.
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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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