Why is this scheme important for RBI Grade B exam candidates?

The Reserve Bank of India (RBI) has started a new scheme that lets foreign investors in the International Financial Services Centre (IFSC) to buy in Sovereign Green Bonds (SGrBs). This thought is focused at encouraging more non-resident investors to take part in India's growing green finance market. It will also make India an attractive place for global investors who care about the environment.

The Indian government first issued sovereign green bonds in January 2023, with plans to issue more as part of its borrowing program for FY2023-24. These bonds will help in raising money for projects that are good for the environment.

Key Highlights of the Scheme:

The RBI's new scheme opens the door for eligible foreign investors in the IFSC to invest in Sovereign Green Bonds. This allows them to help fund projects that are good for the environment in India.

Before this scheme, only foreign portfolio investors (FPIs) registered with SEBI could invest in these bonds using existing routes for government securities.

In April 2023, the RBI announced a plan to make it easier for non-residents to invest in these bonds. This move aims to encourage more international investors to participate in India's green finance market.

Foreign investors can join the primary auctions held by the RBI and trade in the secondary market for these bonds. This gives them more opportunities to invest.

International Banking Units (IBUs) are excluded from primary auctions but can engage in secondary market transactions. This initiative attracts foreign investment to support India's eco-friendly projects through green bonds. By allowing IBUs to trade in the secondary market, the government boosts investment in sustainable initiatives, supporting India's environmental goals and economic growth.

The RBI's new scheme allowing foreign investors in the International Financial Services Centre (IFSC) to invest in Sovereign Green Bonds (SGrBs) is a significant development for those preparing for the RBI Grade B exam and similar competitive exams. Understanding this initiative is crucial for candidates focusing on economic policies and sustainable finance, as it reflects India's growing emphasis on green finance and attracting foreign investment in environmentally friendly projects

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