Q. Consider the following statements:
1.Sovereign Green Bonds (SGrBs) are government debts specifically aimed at funding projects that facilitate transition to a low carbon economy.
2.Foreign Institutional Investors (FIIs) are eligible to invest in India’s Sovereign Green Bonds (SGrBs).
3.SGrBs offer higher interest rates compared to conventional G-Secs.
4.Greenium is the term used to describe the process of converting traditional bonds into green bonds.
Which of the statements given above are correct?
Explanation –
Statements 1 and 2 are correct. SGrBs are issued to raise money for green infrastructure and initiatives that lower the economy’s carbon footprint, supporting the transition to a low carbon economy. The Reserve Bank of India (RBI) has allowed eligible foreign investors, including FIIs, to invest in SGrBs.
Statements 3 and 4 are incorrect. SGrBs typically offer lower interest rates than conventional G-Secs. “Greenium” refers to the lower yield (or higher price) that investors are willing to accept for green bonds compared to conventional bonds due to the environmental benefits of the projects funded by green bonds. Greenium refers to the difference in interest rates or yields between green bonds and conventional government securities (G-Secs).
Source: The Hindu
