More Stories

Informist, Saturday, Aug 10, 2024

 

--RBI Das: To operationalise govt green bond trading on IFSC Oct-Mar 
--RBI Das: Climate taxonomy to aid fund mobilisation via green bonds 

 

NEW DELHI – Sovereign green bonds trading in International Financial Services Centre at the Gujarat International Finance Tec-City, Gandhinagar, is expected to be operationalised in the second half of the current financial year started April, Reserve Bank of India Governor Shaktikanta Das said today. 

 

"We are in discussion with the IFSC, it will be operationalised very soon. I think Oct-Mar, it will be possible," Das said at a press conference following a post-Budget meeting with Finance Minister Nirmala Sitharaman. In April, the Reserve Bank of India had announced that it will issue a framework to enable the trading of sovereign green bonds in GIFT City.

So far in the current financial year, the government has raised only 16.97 bln rupees out of the stipulated 120 bln rupees set to be raised in Apr-Sep through green bonds as it did not find favourable bids. On May 31, the Reserve Bank of India rejected all bids for 60 bln rupees worth of a new 10-year green paper as the government did not want to pay a yield higher than on the 10-year benchmark bond.

 

Globally, green bonds are typically priced at lower yields than regular bonds, and the difference between the yields is known as 'greenium'. Investors tend to demand lower yields on green securities because such investments count towards their environmental, social and governance-related investment goals. However, the government's green bond offerings so far have attracted only modest greeniums, as Indian investors lack incentives to price such bonds aggressively.

 

"As the debt manager of the government, we are watchful of what exactly is happening and if something needs to be done we will interact with the government and deal with it," Das said referring to the rejection of bids earlier this year.

 

GIFT-IFSC is a deemed foreign jurisdiction set up by the government to boost foreign investments in Indian assets, and only foreign portfolio investors can invest through this route. As things stand, investors stand to gain in terms of tax treatment at GIFT-IFSC as the interest on debt instruments is taxed at a lower rate of 9% compared with such income of foreign portfolio investors being taxed at India's treaty rate with the specific country where the investor is based or at the local withholding tax rate of 20%, whichever is lower.

Das today also said that, "one major announcement in this year's budget about developing a climate taxonomy, I think that will have a significant long-term impact on mobilisation of funds for the green sector, not only through green bonds but also overall financing of the green sector."

 

"We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support achievement of the country’s climate commitments and green transition," Sitharaman had said in her Budget speech for 2024-25.  End

 

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.