The Reserve Bank of India (RBI) on November 7, 2024 issued a circular allowing for non-resident investors to invest in 10-year sovereign green bonds (SGrB) through the fully accessible route (FAR).

What Are Sovereign Green Bonds?

SGrBs are issued for raising funds for green projects. The idea is to reduce carbon footprint from the environment and work towards sustainability goals.

The 10-year SGrB securities, now ‘specified securities’ under FAR, will be issued in the second half of the financial year 2024-25.

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What Is Specified Security?

The term ‘specified securities’ means government securities which are periodically notified by the RBI for investment under FAR. There is no ‘quantitative’ limit on investing in such securities by eligible investors, according to the RBI notification.

What Is Fully Accessible Route (FAR)?

FAR is an investment route for non-resident investors where they can invest in certain specified categories of central government securities without any restrictions or ceilings on investment. Note that domestic investors can also invest in these securities.

The bank introduced FAR on April 1, 2020. Under this route, non-resident Indians (NRIs), overseas citizens of India (OCIs), foreign portfolio investors (FPIs), and other entities can invest in government securities as per the debt regulations.

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Calendar For Government’s Dated Securities Issuance

The central bank’s indicative calendar for issuance of Government of India’s (GoI’s) dated securities shows that the government will raise Rs 6.61 lakh crore in the second half of the financial year 2024-25 (October 1, 2024-March 31, 2025). Out of the total, Rs 20,000 crore will be raised through SGrBs of two 10-year and two 30-year bonds, each worth Rs 5,000 crore.

The first of the four tranches this year is the 10-year SGrB, scheduled in the last week of November 2024.

Calendar For SGrB In The Second Half Of FY 2024-25:

• November 25-29, 2024 : 10-year SGrB for Rs 5,000 crore

• December 9-13, 2024 : 30-year SGrB for Rs 5,000 crore

• January 27-31, 2025 : 10-year SGrB for ₹5,000 crore

• February 17-21, 2025 : 30-year SGrB for ₹5,000 crore

The purpose of raising funds through green bonds is to use the funds specifically for sustainable goals of government projects.

These directions are applicable with immediate effect.

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How To Invest?

Retail investors can invest in these bonds through their accounts with RBI Retail Direct or through their broker firm. Non-resident investors can invest in these bonds as specified securities under FAR through the International Financial Services Centre (IFSC). The bonds can be purchased in the primary auctions as per the calendar when these are issued or later in the secondary market.