MUMBAI: RBI deputy governor Rajeshwar Rao said that the government’s proposed sovereign green bonds for raising funds toward eco-friendly infrastructure will help private companies to raise money for their ESG (environment, social and governance) -related debt.
Rao said that the government will raise funds through sovereign green bonds before March 31, 2023. The proceeds of these bonds will be deployed in public sector projects, which will help in reducing the carbon intensity of the economy. “Over time, SGBs would provide a pricing reference for the private sector entities in India for their rupee-denominated borrowing for ESG-linked debt. Thus, the issuance of SGBs would help in creating an ecosystem which fosters a greater flow of capital into green projects and entities undertaking such projects,” said Rao. He was speaking at a BFSI summit organised by the Business Standard.
Rao said that the RBI has set up a sustainable finance group (SFG) within its department of regulation in May 2021 to lead the regulatory initiatives in area of climate risk and sustainable finance in the Indian context. He said that the government would soon come out with regulations in this segment and has received comments from all stakeholders in response to a discussion paper.
Simultaneously, the central bank has also undertaken a survey of large banks across public, private and foreign lenders to get an idea of their level of preparedness for managing climate-related financial risk.
The deputy governor said that the transformation of the global economy to achieve net-zero emissions by 2050 require $9.2 trillion in annual average spending on physical assets, which is $3.5 trillion more than what is being spent today. “In the case of India, the Council on Energy, Environment and Water (thinktank) has already estimated that a total investment of $10.1 trillion would be needed to meet our net-zero commitments by 2070,” Rao said.
Rao said that the government will raise funds through sovereign green bonds before March 31, 2023. The proceeds of these bonds will be deployed in public sector projects, which will help in reducing the carbon intensity of the economy. “Over time, SGBs would provide a pricing reference for the private sector entities in India for their rupee-denominated borrowing for ESG-linked debt. Thus, the issuance of SGBs would help in creating an ecosystem which fosters a greater flow of capital into green projects and entities undertaking such projects,” said Rao. He was speaking at a BFSI summit organised by the Business Standard.
Rao said that the RBI has set up a sustainable finance group (SFG) within its department of regulation in May 2021 to lead the regulatory initiatives in area of climate risk and sustainable finance in the Indian context. He said that the government would soon come out with regulations in this segment and has received comments from all stakeholders in response to a discussion paper.
Simultaneously, the central bank has also undertaken a survey of large banks across public, private and foreign lenders to get an idea of their level of preparedness for managing climate-related financial risk.
The deputy governor said that the transformation of the global economy to achieve net-zero emissions by 2050 require $9.2 trillion in annual average spending on physical assets, which is $3.5 trillion more than what is being spent today. “In the case of India, the Council on Energy, Environment and Water (thinktank) has already estimated that a total investment of $10.1 trillion would be needed to meet our net-zero commitments by 2070,” Rao said.
