Nabard plans to raise Rs 5,000 crore through green bonds in H2FY24

The National Bank for Agriculture and Rural Development (Nabard), an all-India financial institution, plans to raise about Rs 5,000 crore through green bonds from the domestic market in the current financial year (FY24). This would be part of overall bond borrowings pegged at Rs 30,000-35,000 crore in the second half (H2FY24), starting October 2023.

Shaji K V, chairman of Nabard, said the organisation is now focusing on documenting the impact and, in turn, ensuring transparency. It is on the right path to list the green bonds by the end of FY24. The government could consider bringing in incentives for the investors of social and green bonds to boost subscriber interest in such bonds, he said at an event to list social bonds on exchanges.

Earlier this week, it raised Rs 1,040 crore through social bonds having a five-year maturity with a coupon of 7.63 per cent. The base issue size was Rs 1,000 crore. There was also an option to retain oversubscription by way of a green shoe option of Rs 2,000 crore, aggregating to Rs 3,000 crore.

According to the annual report for FY23, fresh bonds amounting to Rs 47,965.8 crore were issued while bonds amounting to Rs 34,110 crore were redeemed during FY23. The outstanding bonds stood at Rs 1,21,147.8 crore as against Rs 1,07,292 crore on 31 March 2022, signalling an increase of 12.9 per cent.

On prospects for issuing bonds in the overseas market, Shaji said the domestic market has enough liquidity to meet requirements. Also, the institution has to consider the total cost implications of raising money from abroad. Nabard is working on plans to enhance the visibility of the institution amongst global investors and fund providers, including multilateral institutions like the Asian Development Bank.

The institution was open to tapping retail investors for bond issuance, for which it would have to work on additional compliance, he added.