Trading of Sovereign Green Bonds at IFSC likely from October, says RBI Governor

RBI Governor Shaktikanta Das

Foreign investors operating within the International Financial Services Centre (IFSC) in Gujarat International Finance Tec-City or GIFT City should be able to invest in sovereign green bonds by the second half of the current financial year.

IFSC at GIFT City offers simplified regulations and tax advantages to attract both local and global financial giants.

"We are in discussions with the IFSC on allowing investment in green bonds, it should be operationalised by the second half of FY25," Reserve Bank of India (RBI) Shaktikanta Das said on August 10.

Back in April, RBI announced that it will allow investment and trading of Sovereign Green Bonds at IFSC, Gandhinagar.

Currently, foreign portfolio investors (FPIs) registered with SEBI are permitted to invest in green bonds under the different routes available for investment by FPIs in government securities.

“With a view to facilitating wider non-resident participation in green bonds, it has been decided to permit eligible foreign investors in the IFSC to also invest in such bonds,” Das had said during the April bi-monthly policy.

Although there is no official full-year target for green bonds, the Centre had said in March that out of the Rs 7.50 lakh crore of total gross borrowings in the first half of FY25, Rs 12,000 crore will be through issuance of sovereign green bonds.

In the Budget presented last month, the government lowered its planned gross market borrowing for the full financial year ending March 2025 by Rs 12,000 crore to Rs 14.01 lakh crore.

In keeping with the ambition to significantly reduce the carbon intensity of the economy, the Union Budget 2022-23 announced the issuance of Sovereign Green Bonds. These instruments are expected to help the Indian government tap finances from potential investors for deployment in public sector projects with sustainable goals.