Govt to issue Rs 20,000 cr ‘Sovereign Green Bonds’ in four tranches this fiscal

The central government has announced plans to collect ₹20,000 crore through the issuance of ‘Sovereign Green Bonds’ in the second half of the financial year 2024-25 (October-March), Finance Ministry said in a press release.

The government aims to complete its borrowing for the latter half of FY25 through a series of 21 weekly auctions. The green bonds will be issued in four tranches, each valued at ₹5,000 crore. The first tranche will consist of a 10-year Sovereign Green Bond, scheduled for issuance between November 25 and November 29.

Following this, a 30-year bond worth ₹5,000 crore will be issued from December 9 to December 13. The third tranche, again a 10-year bond, is set for January 27 to January 31, while the final tranche will consist of a 30-year green bond, to be issued between February 17 and February 21.

Sovereign Green Bonds are a form of government debt designed to finance projects that support India’s transition to a low-carbon economy. The proceeds will specifically fund environmentally sustainable initiatives, including public sector projects that adhere to eco-friendly practices.

Additionally, the government has retained the right to exercise the green shoe option, which allows it to accept additional subscriptions of up to ₹2,000 crore for each security mentioned in the auction notifications. This provision provides flexibility to accommodate increased investor demand.

The Ministry of Finance also announced that the central government’s weekly borrowing through Treasury Bills during the third quarter of FY25 is expected to reach ₹19,000 crore over 13 weeks. To address any temporary discrepancies in government accounts, the Reserve Bank of India (RBI) has set the Ways and Means Advances (WMA) limit for the second half of FY25 at ₹50,000 crore, ensuring adequate liquidity for short-term funding needs.

In its release, the Ministry of Finance said that, in consultation with the Reserve Bank of India, the borrowing program for the second half of 2024-25 has been finalized. For the entire fiscal year 2024-25, the government has budgeted a gross market borrowing of ₹14.01 lakh crore, with ₹6.61 lakh crore, or 47.2 percent, planned to be raised in the second half through the issuance of dated securities and bonds.