Lok Sabha Question No. 97 (STARRED), answered on 2021-02-08
Subject: Green Bonds
Ministry: FINANCE
Asked by: Jasbir Singh Gill

## *97. Shri Jasbir Singh Gill

Will the Minister of FINANCE be pleased to state:

- (a)  steps  taken  by  government  to  promote  local currency  bond  financing  through  domestic institutional investors;
- (b)  whether  the  Government  is  considering  a  Green  Investment  Mandate  for  domestic institutional investors in India to catalyze the market for Green Bonds;
- (c) if so, details thereof and if not, the reasons therefor;
- (d) whether the government has held awareness sessions with the investors to apprise them about green bonds as an asset class; and
- (e) if so, the details thereof?

## ANSWER MINISTER OF FINANCE (SMT. NIRMALA SITHARAMAN)

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

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

## LOK SABHA STARRED QUESTION NO. *97

## TO BE ANSWERED ON MONDAY, FEBRUARY, 8 TH  2021/ MAGHA 19, 1942 (SAKA)

## GREEN BONDS

## Statement  referred  to  in  the  reply  to  part  (a)  to  (e)  of  the  LOK  SABHA  Starred Question no *97 raised by Shri Jasbir Singh Gill due for reply on 08 th February, 2021 regarding 'Green Bonds'.

(a): The Government as well as Securities and Exchange Board of India (SEBI), the market regulator  for  listed  securities  including  bonds,  has  taken  various  steps  to  promote  the development  of  the  corporate  bond  market,  which  is  dominated  by  domestic  institutional investors. Some of the recent measures taken are as under:

- (i). Introduced  the  framework  for  Debt  Exchange  Traded  Funds  (ETFs)/Bond  Index Funds under which 'Bharat Bond ETF' has been launched.
- (ii). Investment guidelines for institutional investors have been modified by the government  and  PFRDA  to  lower  the  minimum  rating  from  'AA'  to  'A'  for  the investible bonds.
- (iii). For  facilitating  the  bilateral  negotiations  in  secondary  market  trading  of  corporate bonds a platform has been developed by exchanges to seek a quote and to respond to a quote, while keeping an audit trail of all interactions. Institutional investors have been mandated by their respective regulators to undertake a specified percentage of their transactions in corporate bonds through such platform.
- (iv). The  timelines  for  listing  of  securities  issued  on  private  placement  basis  has  been reduced to 4 days from 15 days from the date of closure of issue, so that institutional investors not only secure allotments but also liquidate their investments faster.
- (v). An  operational  framework  has  been  introduced  for  transactions  in  defaulted  debt securities post maturity/ redemption date, so that domestic institutional investors have an avenue to liquidate their investment through potential buyers who may see value in such investments.
- (vi). A uniform enforcement structure, including imposing fines on issuers of listed debt securities for non-compliance with continuous disclosure requirements has been put in place to enhance the culture of compliance in the market.

(b)  &  (c):    Government  has  not  given  any  Green  Investment  Mandate  for  domestic institutional  investors  in  India  to  catalyze  the  market  for  green  bonds.  However,  SEBI  has provided  for  a  regulatory  framework,  vide  its  circular  dated  May  30,  2017,  wherein  it  is specified that a debt security shall be considered as 'Green' or 'Green Debt Securities', if the  funds  raised  through  issuance  of  the  debt  securities  are  to  be  utilized  for  the  specified project(s) and/or asset(s) mentioned in the said circular.

(d) & (e): SEBI undertakes various investor education and awareness activities such as mass media campaign, workshops etc. to create awareness on relevant issues in securities market and to protect the interests of investors in securities market. However, no awareness program specifically on Green Bonds has been conducted by SEBI.

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