Nabard’s Rs 3,000-5,000 crore green bond issue likely by March 2024: Chairman Shaji KV

Shaji KV, Nabard Chairman

The proposed Rs 3,000-5,000 crore green bond issue by the National Bank for Agriculture and Rural Development (Nabard) is likely to happen by the end of this financial year, Shaji KV, Nabard Chairman, told Moneycontrol in an exclusive interview on July 13.

“We are planning to issue green bonds by the end of this year. The amount can be between Rs 3,000-5,000 crore. But for that, a lot of documentation needs to be there,” said Shaji.

The Nabard chief did not specifically mention the month when the bonds would be issued or the tenure for these securities.

Green bonds are debt instruments used by corporates and banks to raise funds from the capital market. The funds raised through these bonds will be utilised for renewable and green projects.

“We need to audit ourselves so that we are capable of showing to the investors that whatever the green bonds are raising is properly used. So, we are in that process now, self-ordering ourselves,” he said.

Also read: Exclusive: LIC, pension funds keen on investing in longer-term govt Green Bonds

In February, Nabard had also planned to raise the same amount through a green bonds debut. However, those plans did not work out due to a lack of approvals and framework-related issues, according to capital market sources.

At that time, the company had planned to raise these funds via bonds maturing in five to 10 years, as per media reports.

“...the investor class may be different types. But then we should also be there in green. Whatever we do, it is affecting the climate, so we are trying to mitigate climate risks. So, the green bond is there,” said Shaji.

Fund raising

According to the data compiled from the NSE and BSE electronic bidding platforms, Nabard has raised Rs 29,520.25 crore through corporate bonds in the domestic bond market.

According to the Prime database data, through commercial papers, it has raised Rs 72,940 crore so far in 2023.

In terms of fundraising via commercial papers, Nabard is the second biggest fundraiser so far in 2023, the data showed.

Also read: Capitalism alone won’t save the planet

Tepid response to green bonds so far

The demand for green bonds in the domestic market has remained low in the last two years due to the small investor base for this product.

Consequently, issuances of these securities also halved in the last one-and-a-half years.

Moneycontrol reported on July 12 that issuances have halved due to higher yields and lower appetite from investors.

According to the data from Prime database, issuers (including companies and banks) have raised Rs 795 crore through green bonds in the domestic market from financial year 2022-23 till date in 2023-2024. Of the total, Rs 495 crore was raised in FY2023, and Rs 300 crore in the ongoing financial year.

In FY 2021-22, issuers raised Rs 2,677 crore via green bonds.

In FY2022, Indian firms also raised Rs 26,192 crore via green bonds in the overseas market.

Since then, however, Indian corporates and banks have not raised any funds from the overseas market.