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Economy
Mahesh

10/11/22 13:23 PM IST

Centre releases Green Bonds framework

In News 
  • The Central Government recently released the framework for the proposed sovereign Green Bond.
Green bonds
  • Green bonds are financial instruments that generate proceeds for the investments in environmentally-suitable and climate friendly projects. These instruments have lower capital cost than regular bonds.
  • Indian Government announced at the Union Budget 2022-23 that it will issue its maiden sovereign green bonds in the present financial year. The government announced that it would auction Rs.16,000 worth of green bonds during the second half of FY2023. 
About Framework 
  • As per this framework, the payments of principal and interest on the Green Bonds will not rely on the eligible projects’ performance. Therefore, the investors will not be adversely affected by any project-related risks.
  • The eligible expenditure are limited to government expenditures that occurred within 12 months before the issuance of the bond. All of the proceedings for the bond will be allocated to projects within 24 months after the issuance.
  • While the Union Ministry of Finance has the right to make any changes in the Green Bonds Framework, the modifications made will be reviewed by an independent organization. The framework was reviewed by the Norway-based CICERO Shades of Green – a firm that provides second opinions on green bond frameworks.
  • The framework has been rated “Medium Green” with a “Good” governance score by CICERO. The medium green rating is provided to projects and solutions that make significant stride towards long-term vision but not quite there yet.
Source- Times of India 

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