Where To Buy Green Bonds In India?

Green bonds (GBs), started only in 2007, have recently gained prominence globally, especially after the outbreak of the ongoing pandemic. These are seen as lucrative opportunities for investors interested in debt investments. India stands the second largest green bond issuer among emerging economies.

Investors should consider green bonds because these bonds carry lower risk than other types of bonds. The simple reason is that the issuer asserts to use the amount raised to finance declared green projects. The repayment is tied to the issuing entity and not the performance or success of the projects.

Before moving towards the investing concept of these bonds, let us understand green bonds and get fundamental conceptual clarity.

What are Green Bonds?

Green bonds (GBs) are debt instruments explicitly designed to fuel green infrastructure and support environmental and climate-related projects. Green bonds can be government or company-issued securities to meet green projects' significantly high capital requirement. Like other debt instruments, investors provide the capital to the issuer and receive interest at the bond maturity. Green bonds India have an investment tenure of 10 years, i.e., lower than the international issues. These are also called Social Responsible Investments and Green Investment in India.

Highlights

• A Green Bond is a bond issued to finance projects that contribute to environmental benefits, such as energy efficiency, biodiversity conservation, renewable energy, clean transportation, sustainable water projects, etc.

• It is an innovative long-term investment vehicle that requires dedicated funds. Green projects need a long duration to drive returns. Therefore, investors park only dedicated funds to these bonds.

• There is complete transparency between issuers and investors towards the use of proceeds.

• They offer attractive tax incentives.

Sovereign Green Bonds in Union Budget 2022

In the Union Budget 2022, the finance minister said India will issue sovereign green bonds to fund green infrastructure. The proposed sovereign green bonds may open up a local market in India to encourage dedicated funds. Institutional investors may necessarily have to invest a said corpus into these bonds to boost green investment in India.

The proceeds of green bond issued by the Indian government will go towards projects in the public sector to lower the economy's carbon intensity as per the speech by the Finance Minister while presenting the Union Budget.

How to invest in Green Bonds in India

• These bonds generally required a high amount of investment, therefore preferred by high net worth investors (HNIs) and institutional investors over retail participation.

• Individual investors can consider ETF (exchange-traded funds) and mutual funds for indirect exposure to green bonds. Green bonds themselves are often not directly accessible to individuals. However, individuals can keep an eye on Municipal Corporation’s green bonds.

Ghaziabad Municipal Corporation became the first municipal corporation to issue green bonds and raise around Rs. 150 crores to fund a tertiary sewage treatment plant in the domestic market. The coupon rate was 8.1% on a 10-year note. These bonds are listed on the Bombay Stock Exchange.

JSW Energy has also launched its green bond issue in the overseas market to raise money against its hydropower assets.

You can also invest in bonds in the secondary market if existing investors want to sell their bond investments. There are various online platforms where you can find top bond issuers. Complete your KYC and Demat account verification, select your bond and make bond investment online.

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