Lok Sabha Question No. 236 (STARRED), answered on 2017-03-17
Subject: Green Bonds
Ministry: FINANCE
Asked by: PRALHAD VENKATESH JOSHI

## Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA

## STARRED QUESTION No. *236

TO BE ANSWERED ON FRIDAY, March, 2017/ 1938 (Saka) 17th Phalguna 26,

## GREEN BONDS

## *236. SHRI PRALHAD JOSHI:

- (a) whether the Government is pushing financing through the issuance of green bonds;
- (6) if the details thereof; SO,
- (C) whether the rules for the issuance and of green bonds have been finalised; listing
- (d)if so, the details thereof; and
- (e)the likely benefits for investors for making investments in the aforesaid bonds?

## ANSWER

MINISTER OF FINANCE (SHRI ARUN JAITLEY)

- (a) to (e): A statement is placed on the Table of the House.

Statement referred to in the reply to LOK SABHA Starred Question no *236 (& to e) raised by Shri Pralhad Joshi; Member of Parliament due reply for 17th March, 2017 regarding "Green Bonds"

(@) to (e): Issuance of Green Bonds in India does not require any amendment to the existing SEBI regulations   for issuance of corporate bonds  viz SEBI (Issue and Listing of Debt Securities) Regulations; 2008 (hereinafter "ILDS Regulations"). SEBI has proposed that in case of green bonds, the issue and requirements aS prescribed under ILDS Regulations will continue to be applicable, like any corporate bond issuance. However; for designating an issue of corporate bonds as green bonds, in addition to the compliance with the requirements under ILDS Regulations; an issuer shall have to disclose in the offer document following additional infornation about the green bonds, which have been based upon the Green Bond Principles, 2015, laid down by International Capital  Market Association (ICMA); namely regarding use of proceeds, project evaluation and selection, management of proceeds, and reporting On annual basis about list of projects to which green bond proceeds have been allocated alongwith expected environmental impact of such projects. listing regular

SEBI had come out with & consultation paper for the disclosure requirements for "Public issue and of green bonds and of privately placed green bonds' and the same was placed After analyzing the comments received, & proposal for guidelines on disclosure requirements for issuance and of green bonds was placed by SEBI before its Board in the SEBI Board meeting held on 11.01.2016 and the same was approved by the SEBI Board. listing listing listing

Ministry of Finance vide letter dated 14.06.2016 sent certain comments to SEBI and vide letter dated 06.02.2017 requested SEBI to take action as appropriate for finalizing the guidelines for Green Bonds. In March 2017, SEBI has sought the comments of MNRE on the draft additional disclosure requirements for issuance of green bonds.

As per SEBI $ concept paper; the benefits of green bonds are a8 under: key issuing

- i Positive public Relations: Green bonds can help in enhancing an issuer' $ reputation; as this is an effective way for an issuer to demonstrate its green credentials. It displays the issuers commitment towards the development and sustainability ofthe environment Further; this may als0 generate some positive publicity for the issuer:
- Investor\_Diversification:-There are specific   global which are source of focuses primarily on environmental, social and governance related aspects of the projects in which intend to invest  Thus, green bonds provide an issuer the access to such investors which otherwise may not be able to with a regular bond. pool capital they they tap
- iii. Potential for\_pricing advantage: The green bond issuance attracts wider investor base and this may in turn benefit the issuers in terms of better pricing of their bonds vis-a-vis a regular bond. Currently there is very limited evidence available in this regard, however &8 demand of green bonds increases it is likely to drive increasingly favorable terms and a better for the issuer. Further; with increasing focus of the global investor community towards green investments, it is expected that new set of investors will enter into this space leading to lowering the cost of funding for green projects. price

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