One month after proposing the first-ever rules of issuance and listing of green bonds at stock exchanges, an Indian regulator has finalised and approved the procedures.
The Securities and Exchange Board of India (SEBI) has issued final guidelines on the issuance of green bonds, deciding that issuance and listing of green bonds shall be governed under SEBI (Issue and Listing of Debt Securities) Regulations, 2008. The Board has not stated a blanket definition of green bonds and will specify it “from time to time”.
The Board has made optional the requirement for independent third party reviewer/certifier/validator, for reviewing/certifying/validating the pre-issuance and post-issuance process, including project evaluation and selection criteria. However, it will be mandatory for the issuer to make disclosures including use of proceeds, list of projects to which Green Bond proceeds have been allocated, etc., in the annual report/periodical filings made to the stock exchanges.
Most importantly, the Board in its decision has tried to link the green bonds market with the clean energy goals stated in India’s Intended Nationally Determined Contribution (INDC). Green bonds can be an important source of raising finance to meet the emission reduction and renewable energy targets.
2015 was a landmark year for the green bonds market, globally as well as in India. Total issuance of labelled green bonds crossed the $40 billion market for the first time ever, the Climate Bonds Initiative recently reported. A number of private and state-owned entities in India issued their first green bonds. Yes Bank was the first one to issue green bonds in India. The Export-Import Bank of India and IDBI Bank also issued green bonds. CLP Wind Farms became the first renewable energy project developer to issue green bonds in India.