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Green Bonds to Comprise 8-10 Percent of Corporate Bond Issuances in India, SBI Chairman Predicts

October 11, 2023. By News Bureau

Dinesh Kumar Khara, the Chairman of the State Bank of India (SBI), has predicted a significant increase in green bond issuance in India, with these bonds accounting for 8-10 percent of the total corporate bond issuance in the years to come.

Khara made this announcement during the second edition of the 'FICCI ESG Summit' held on Monday, where he addressed the rapidly evolving landscape of sustainable finance.

Khara emphasised India's growing need for capital in light of the net zero 2050 scenario, estimating it at 11 percent of GDP, which is higher than the global average of around 7.5 percent.

To meet the 2030 targets, he noted that India would require an annual investment of approximately USD 110 billion. He stressed the importance of tapping into global capital resources, including sovereign wealth funds, global pensions, private equity, and infrastructure funds.

Highlighting the changing nature of the green bond market in India, Khara pointed out that although the cumulative value of green bonds issued since 2018 remains a small fraction of total bond issuance, India consistently outperforms several advanced and emerging economies in this regard. He anticipates a rise in rupee-denominated green bond issuances by Indian corporations in FY 2024.

Khara underscored the significance of policy interventions, such as deepening the corporate bond market and promoting consistent corporate reporting, to overcome limitations in the green finance sector. He also highlighted SBI's efforts to integrate environmental, social, and governance (ESG) criteria into its lending practices, emphasizing the financial sector's role in driving positive change within corporations and advancing a sustainable society.

K Rajaraman, Chairman of the International Financial Services Centres Authority (IFSCA), discussed the substantial evolution in sustainable finance post the adoption of the Paris Agreement.

He mentioned measures such as ESG debt listing, mandatory sustainable lending by banks, and ESG fund's disclosure regimes aimed at creating a comprehensive product range for green and sustainable projects while managing climate-related financial risks and curbing greenwashing.

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International Financial Services Centres Authority