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What Are Social Bonds?

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.


  • 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.