What Are Social Bonds?
The National Bank for Agriculture and Rural Development (NABARD) recently issued its inaugural social bonds with a total size of Rs 1,040.50 crore
- Social bonds, also known as social impact bonds and abbreviated as SIB, are the type of bond where the bond issuer is gathering funds for a project that has some socially beneficial implications.
- These bonds are designed to finance projects that address various social issues, such as healthcare, education, affordable housing, poverty alleviation, and environmental sustainability.
- The Pimpri Chinchwad Municipal Corporation (PCMC) in Maharashtra’s Pune and United Nations Development Programme (UNDP) in 2020 co- created India’s inaugural SIB.
- This is the first externally certified AAA-rated Indian Rupee-denominated SIB in the country. The bonds have been rated ‘AAA’ by CRISIL and ICRA.
- The base issue size of the social bonds was ₹1,000 crore, with an option to retain oversubscription up to ₹2,000 crore, thereby aggregating up to Rs 3,000 crore.
- The face value of each bond is ₹1 lakh.
- Maturity: 5 years
- Coupon Rate: 7.63 per cent.
NABARD:
- It is a financial institution that was set up by the Indian government to promote sustainable agriculture and rural development in the country.
- It is the main regulatory body in the country’s rural banking system.
- It was established in 1982as a central regulating body for agriculture financing and the rural section.
- The government of India established NABARD under the outlines of the National Bank for Agriculture and Rural Development Act 1981.
- Objective is promoting agriculture and rural development through participative financial and non-financial interventions, innovations, technology and institutional development for securing prosperity.
