• AK & Partners

Policy Reforms in Supporting Green Bonds

Authored by Kritika Krishnamurthy, Partner


India’s distinctive topography, with its vast climatic diversity makes it highly vulnerable to Anthropocene era’s biggest challenge i.e., Climate Change. As part of its endeavour to accomplish sustainable development goals, India is working towards achieving low-carbon economy with ambitious targets. For achieving these aspirational targets, India is implementing several policies to protect itself from the potential risks of climate change. However, to achieve these targets, adequate capital funding is required. This is where the concept of green bonds comes into the picture. Introduced by the Securities and Exchange Board of India ("SEBI”), a green bond has been described as a debt instrument wherein the proceeds of the offering are 'ear-marked' for financing of ‘green’ projects. The Disclosure Requirements for Issuance and Listing of Green Debt[1] (“2017 Circular”) provide the broad categories of project(s) and asset(s) where the proceeds of green bonds can be utilised. These categories include renewable and sustainable energy, clean transportation, sustainable water management, climate change adaptation, energy efficiency including efficient, sustainable waste management among others[2].


After issuing its first green bond in January 2015, India has issued green bonds of about US$8 billion since January 1, 2018, which constitute0.7 per cent of all the bonds issued in the Indian financial market.[3] With climate change becoming an important consideration in policy and welfare, the concept of green bonds has gained traction in the past few years. Resultantly, the government has offered incentives time and again to promote the issuance of green bonds by the private sector. In fact, to ensure steady flow of finance into sustainable projects, Bombay Stock Exchange and the National Stock Exchange publish Environmental, Social and Governance ("ESG") indices.


For public issue and listing of Green Debt Securities ("GDS”) and listing of privately placed GDS, in addition to the requirements prescribed under Issue and Listing of Debt Securities Regulations, 2008 (“SEBI ILDS”), the disclosure requirements under the 2017 Circular shall be complied with. These requirements include, inter alia, the obligation on the issuer to make certain disclosures in the offer document like the environmental objectives of the issue of GDS, details of decision-making process followed for determining the eligibility of projects or assets for which proceeds of GDS are to be utilised etc. Apart from these one-time disclosure requirements, the 2017 circular also mandates certain recurring annual and half-yearly disclosures. If the green bonds are issued to overseas investors, the debt raised will be considered external commercial borrowing and the issuers will have to comply with under Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (“ECB Regulations”).


India is still fairly new to green bonds, yet it is the second largest emerging market for green bonds[4]. Moreover, it was announced during the budget speech that India will issue sovereign green bonds and will make it a part of borrowing programme. The proceeds, will deployed in public sector projects, that will further help reduce carbon intensity of the economy. As we can see, green bonds as a concept is still an emerging and that could be one of the reasons behind India lacking a dedicated regulation governing green finance. But, the increasing focus on climate change provides immense scope for Indian regulators to implement strategies to provide access to larger capital resources for funding climate change initiatives.



[1] Disclosure Requirements for Issuance and Listing of Green Debt Securities, CIR/IMD/DF/51/2017, May 30, 2017 [2] Para 2.1, Disclosure Requirements for Issuance and Listing of Green Debt [3] Saurabh Ghosh, Siddhartha Nath and Abhishek Ranjan, Green Finance in India: Progress and Challenges, RBI Bulletin January 2021 [4] Green Bonds in India, Monday, March 8 2021, available at < Green Bonds in India | U.S. Agency for International Development (usaid.gov)>

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