CrackitToday App

What are Green Bonds? Union Budget 2022

Green Bonds:

 

Finance Minister Nirmala Sitharaman in her Budget speech announced that the government proposes to issue sovereign green bonds to mobilise resources for green infrastructure.

  • The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
  • Now, the government has clarified that these rupee-denominated papers will have a long tenure to suit the requirement of green infrastructure projects.

Green Bond:

  • A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.
  • These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.​
  • Green bonds may come with tax incentives to enhance their attractiveness to investors.
  • The World Bank is a major issuer of green bonds.
  • It has issued 164 such bonds since 2008, worth a combined $14.4 billion. In 2020, the total issuance of green bonds was worth almost $270 billion, according to the Climate Bond Initiative.
  • Green bonds work just like any other corporate or government bond.
  • Borrowers issue these securities in order to secure financing for projects that will have a positive environmental impact, such as ecosystem restoration or reducing pollution.
  • Investors who purchase these bonds can expect to make as the bond matures.
  • In addition, there are often tax benefits for investing in green bonds.

Leave a Reply

Your email address will not be published.

CrackitToday App