The Reserve Bank of India (RBI) has launched a new scheme that allows foreign investors in the International Financial Services Centre (IFSC) to invest in Sovereign Green Bonds (SGrBs). This move is aimed at encouraging more non-resident investors to take part in India’s growing green finance market.
The Indian government first issued sovereign green bonds in January 2023, with plans to issue more as part of its borrowing program for FY2023-24.
Key Highlights of the Scheme
- The RBI’s new scheme opens the door for eligible foreign investors in the IFSC to invest in Sovereign Green Bonds.
- Previously, only foreign portfolio investors (FPIs) registered with SEBI could invest in these bonds using existing routes for government securities.
- In April 2023, the RBI announced a plan to make it easier for non-residents to invest in these bonds.
- Foreign investors can join the primary auctions conducted by the RBI and trade in the secondary market for these bonds.
- However, International Banking Units (IBUs) are not allowed to participate in the primary auctions but can trade in the secondary market.
This initiative aims to attract more foreign investment into India’s efforts to fund environmentally friendly projects through green bonds.
The RBI’s new scheme allowing foreign investors in the International Financial Services Centre (IFSC) to invest in Sovereign Green Bonds (SGrBs) is a significant development for those preparing for the RBI Grade B exam and similar competitive exams. Understanding this initiative is crucial for candidates focusing on economic policies and sustainable finance, as it reflects India’s growing emphasis on green finance and attracting foreign investment in environmentally-friendly projects.
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