Rupee-denominated green bonds to pick pace from FY24: SBI's Dinesh Khara

He highlighted that India began green bond issuances in 2014, has garnered Rs 43 billion through green bonds and has been instrumental in augmenting the adoption of renewable energy

Rupee-denominated green bond issuances are likely to pick up from this financial year, following the government's bond issuance for the second consecutive year, State Bank of India Chairman Dinesh Khara said on Monday.

"The rupee-denominated green bond issuance by corporates is expected to pick up from financial year 2024 with the government kick-starting issuance of sovereign green bonds,” he said at the FICCI ESG Summit.

The government issued Rs 20,000 crore of green bonds in the last financial year, which was part of its borrowing programme. It will raise another Rs 20,000 crore through such bonds in FY24.

He said India started green bond issuances in 2014. It has raised Rs 4,300 crore through green bonds and has played a crucial role in increasing the use of renewable energy, Khara said.

India aspires to become a net-zero carbon emissions economy by 2070 and intends to source 50 per cent of its energy from non-renewable sources by 2030, Khara said.

“To achieve the short-term target by 2030, India will require an annual investment of roughly $110 billion. The investment required to chart the net-zero emission road map will be much higher,” Khara said.

Recently, SBI devised strategies to quantify the carbon footprint of its Rs 33 trillion loan portfolio at the account level. This initiative seeks to offset climate risks and promote sustainable financing.

“At bank level, we have started working out a risk matrix where we give some credits for those embarking upon green initiatives in their ventures,” said Khara.

Discussing the necessity for a policy framework promoting awareness of the green finance ecosystem in India, he said: “There is a need for chartered accountants to come out with some auditing standards to help the corporates in terms of having annual data relating to the green initiatives and their outcome.”

He highlighted the importance of deepening the bond market, standardisation of green investment, consistent corporate reporting, and removal of information asymmetry to overcome the shortcomings in the green finance market.

Speaking at the same event, Federal Bank Executive Director Ashutosh Khajuria said the lender aimed for a green loan disbursal of Rs 13,000 crore by FY25 with current sanctioned funds at Rs 7,490 crore and outstanding at Rs 5,083 crore.