On June 13th, 2025, the Reserve Bank of India (RBI) auctioned Sovereign Green Bonds (SGrBs) worth ₹5000 Crore on behalf of the Government of India The auction was part of the issuing of government securities (G-Sec) and the scheduled auction in the face of G-Sec of ₹30000 Crore is notable to reinforce India’s commitment to financing sustainable development and sustainable finance through market-based instruments.
What are Sovereign Green Bonds?
Sovereign Green Bonds are a unique category of government bonds where the proceeds of the bond issuing are dedicated to funding green infrastructure and climate-friendly projects. The projects supported by Sovereign Green Bonds include financing solar and wind energy projects, energy efficiency buildings, sustainable transportation and low carbon technologies for pollution reduction. Sovereign Green Bonds enable the government to draw financing to further advance the green agenda and provide a safe investment backed by the sovereign guarantee of the Republic of India.
The Sovereign Green Bonds are important for the following reasons:
- It further supports India’s climate action agenda derived from the Paris Agreement.
- Allows ethical investors to contribute toward sustainable development.
- Assist in holding the government accountable for environmental impacts through public financing.
Auction Highlights:
Below is a summary of the government securities auction that took place on June 13, 2025:
| Security Type | Amount Notified | Coupon Rate |
| Sovereign Green Bonds (2054) | ₹5,000 crore | 6.98% |
| 7.37% GS 2031 | ₹11,000 crore | 6.79% |
| 7.40% GS 2074 | ₹14,000 crore | 7.09% |
Recap on Auction Mechanism
The auction was conducted on the RBI e-Kuber platform, an electronic bidding platform for banks and financial institutions. The auction has two parts:
- Non-competitive bids: The non-competitive bidder is a small investor who does not have to bid aggressively in order to get the average cut-off price.
- Competitive bids: Competitive bidders include institutional investors, such as banks and mutual funds, who are able to quote the yield/price they want.
Bidding Timeline for June 13:
- Non-competitive bids: 10:30 AM – 11:00 AM
- Competitive bids: 10:30 AM – 11:30 AM
Settlement: Successful bidders will receive their bonds on June 16, 2025 and payment will be made on that date.
ACU Option: The RBI also kept open the Additional Competitive Underwriting (ACU) option or window from 9:00 – 9:30 AM so that primary dealers could underwrite this extra allotments ( ₹2,000 crore for each security).
Overall, this is a good, well-organized process that maintains transparency, price discovery and is good for funding the government.
Why Do These Bonds Matter?
While ambitious, India’s intended target of net-zero carbon emissions by 2070 will necessitate a massive green financing ecosystem. Sovereign Green Bonds serve three strategic aims:
- To Fund Green Infrastructure : Allowing the government to fund large-scale investments in renewable energy or climate-resilient infrastructure.
- To Grow ESG Investment: Providing an opportunity for both Indian and international investors to invest in sustainable development through a credible and government-backed bond.
- To Enhance India’s International Image: Conveying India’s view towards encouraging the private sector to align with international climate finance initiatives and validating its commitment to climate finance domestically and internationally.
Market Sentiment & Challenges Recent:
While the June 13 auction concluded successfully, the reserve was completed after an extended period of uncertainty in the bond markets.
In previous auctions (i.e. the auction on May 31, 2024), the RBI rejected all green bond bids, expressing that investors demanded higher yields due to global inflation, volatility in interest rates, and rising crude oil prices.
Such drastic fluctuations in return expectations suggest an uncertain investor expenditure horizon in the case for investment where sustainable bonds are no different than bonds regardless of environmental return prospects.
However, the fact the re-issuance went ahead is a significant indicator of normalisation returning to the green bond market; particularly the size and demand.
Conclusion:
The successful re-issuance of ₹5,000 crore Sovereign Green Bonds on June 13, reinforced India’s commitment toward a sustainable and low-carbon economy. With evident investor demand and government endorsement, the issuance of such instruments is bound to be important in financing the climate objectives. Further, with the growth of green finance as a trend Sovereign Green Bonds really show a strong opportunity to do “green.”
Disclaimer:
This article provides only facts about a product and does not provide investment advice to the reader. A reasonable reader should consider consulting a financial professional before going ahead with investing. The facts and rates associated with the bond may change in accordance with governing bodies and earnings in the market.