RBI Greenlights Foreign Investment in Sovereign Green Bonds

The Reserve Bank introduced a scheme allowing foreign investors in the International Financial Services Centre (IFSC) to invest in sovereign green bonds to enhance non-resident participation. The scheme facilitates investments in green bonds issued by the Indian government, with primary and secondary market dealings permitted under specified guidelines.

The Reserve Bank of India has launched a new scheme aimed at enhancing foreign investment in sovereign green bonds at the International Financial Services Centre (IFSC).

This initiative allows non-residents to participate in Indian government-issued green bonds, significantly broadening the investment base for these eco-friendly instruments. The government first issued these bonds in January 2023, and they have been incorporated into the borrowing calendar for the fiscal year 2023-24.

While foreign portfolio investors (FPIs) registered with Sebi already have routes for investing in government securities, the scheme announced in April is designed to further facilitate non-resident involvement in the growing green finance sector. The RBI's latest circular permits eligible foreign investors to engage in both primary auctions and secondary market transactions within the IFSC, under specified Know Your Customer (KYC) protocols.

(With inputs from agencies.)