Nabard to list social bonds on September 29; launching bonds based on sustainability bonds

The National Bank for Agriculture and Rural Development (Nabard) has announced that it will list its first social bond as an initial loan facility of Rs 3,000 crore on 29 September.  “This is the first done by an AAA-rated entity. It will be followed by sustainable development and green bonds. Climate and sustainability are very important. We have recently created a unique industry to respond to the needs of these sectors,” Nabard President Shaji KV  said. While the market is abuzz with reports that the bank will take such new loan instruments to finance sustainable, environmental, and social sector projects, the specific schedule for issuing bonds has been announced for the first time. Shaji was in Hyderabad to attend the national millet conference organized by the business sector and Nabard last week. He said that Nabard can borrow ₹ 3-4 lakh in the current financial year. “It is separate and governed by SEBI rules.

 A framework for sustainable development bonds 

  The bank recently announced a sustainability bond framework to finance and refinance new or existing eligible green and social projects. The main criteria according to which the project is financed from these bonds are the promotion of the environment to mitigate the effects of climate change, the conservation of natural resources and biodiversity, and the prevention and control of pollution. Projects that promise energy efficiency, including green buildings, energy storage, and smart grids, would also be eligible through the new bonds taken by Nabard. Projects belonging to the categories of affordable basic infrastructure in the social sector; availability of essential services (health care, education, and vocational training); food security, and job creation.

 Cooperative sector 

 Noting that the government is working to strengthen the cooperative sector, the bank is financing state cooperatives so that they can ensure the flow of money to the district and core cooperatives. “The infrastructure fund for agriculture is ₹ 5,000 crore. We offer them money at 4%. From this, they can claim a 3 percent interest subsidy. In practice, they get money at one percent. We are aware that these are  1-2 crore projects and we should not burden societies with debt”. He said that agricultural credit is not a limiting factor in supporting local projects.

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