Scheme for Trading and Settlement of Sovereign Green Bonds in the International Financial Services Centre

Current Context: The Reserve Bank of India (RBI) has introduced a scheme to facilitate the trading and settlement of Sovereign Green Bonds (SGrBs) in the International Financial Services Centre (IFSC) in India.

• This scheme aims to encourage wider participation from foreign investors.
• Key points of the scheme include:
• Eligibility: Foreign investors in the IFSC can invest in SGrBs issued by the Government of India.
• Primary and Secondary Markets: Investors can participate in primary auctions conducted by the RBI and trade in the secondary market within the IFSC.
• Restrictions: Investors are not allowed to repackage or create derivative instruments based on these bonds, nor can they engage in repo transactions involving these securities.
• This initiative is part of India’s broader efforts to promote green financing and attract international investment in sustainable projects.

Question:

1 What is the primary objective of the RBI’s scheme for Sovereign Green Bonds (SGrBs) in the International Financial Services Centre (IFSC)?

• A) To facilitate repackaging of green bonds into derivatives
• B) To promote green financing and attract international investment
• C) To limit foreign participation in India's green projects
• D) To encourage repo transactions for green bonds

Answer: B) The scheme is part of India’s broader efforts to promote green financing and attract international investment in sustainable projects through the trading and settlement of Sovereign Green Bonds in the IFSC.