NABARD
SOCIAL BONDS – POLITY
News: NABARD raises more than ₹1000 crore
via social bonds
What's
in the news?
●
National Bank for Agriculture and Rural
Development (NABARD) said it has issued its first rupee-denominated AAA rated
social bonds with a total size of ₹1040.50 crore.
Key
takeaways:
●
The bonds issued privately to eligible institutional investors will
be listed on the Bombay Stock Exchange
(BSE) on September 29, 2023.
●
Country’s apex development finance
institution said these triple A rated bonds are evidence of its commitment to
sustainable finance.
●
This is the first such issue by an AAA-rated entity in the country.
●
It will be followed by sustainability and green bonds.
Sustainability
Bond Framework:
●
It seeks to finance and refinance new or
existing eligible green and social projects.
●
The bonds, issued privately to eligible
institutional investors, are set to be listed on the Bombay Stock Exchange
(BSE)
Criteria:
The key criteria to make
a project eligible to get financing from green bonds include
●
Contribution to the environment to
mitigate climate change effects.
●
Conservation
of natural resources and biodiversity.
●
Prevention and control of pollution.
●
Projects that promise energy efficiency,
including green buildings, energy storage, and smart grids, would also be
eligible to get funding through the new breed of bonds that NABARD is rolling
out.
●
In the social sphere, ventures that fall
into the categories such as
○
Affordable basic infrastructure
○
Access to essential services (health,
education, and vocational training)
○
Food security, and employment generation.
Go
back to basics:
Social
Bond:
●
A social bond is a type of financial
instrument issued by governments, international organisations, or corporations
to raise funds for projects and initiatives that have a positive social impact on society.
●
These bonds are designed to finance
projects that address various social issues, such as healthcare, education,
affordable housing, poverty alleviation, and environmental sustainability.