RBI Notification

RBI Issues a Notification on Inclusion of Sovereign Green Bonds in Fully Accessible Route

RBI Issues a Notification on Inclusion of Sovereign Green Bonds in Fully Accessible Route

As a seasoned developer and financial analyst, I recognize the import of the Reserve Bank of India’s (RBI) recent notification RBI/2023-24/81 dated November 8, 2023, which unfolds a significant chapter in the investment landscape. This communiqué heralds the RBI’s strategic inclusion of Sovereign Green Bonds within the ambit of the Fully Accessible Route (FAR) for non-resident investments in Government Securities (G-Secs). Let us unravel the layers of this development to understand its profound implications.

Analysis: The Greening of Investment Channels

The FAR, introduced on March 30, 2020, represented a liberalized framework aimed at enhancing foreign participation in the Indian debt market. By designating select G-Secs as ‘specified securities,’ the RBI opened the floodgates for non-resident investors, ensuring unfettered access alongside domestic stakeholders.

Expanding Horizons with Sovereign Green Bonds

The latest RBI circular marks a pivotal shift — the inclusion of Sovereign Green Bonds as ‘specified securities.’ These instruments, part of India’s commitment to sustainable development, fund projects with environmental benefits, encapsulating the spirit of green finance.

The Technical Underpinnings

Pursuant to Section 45W of the Reserve Bank of India Act, 1934, the directions within the circular stand on solid legal ground. They also complement the existing framework, as delineated in the previous notifications of March 30, 2020, July 07, 2022, and January 23, 2023.

Case Study

Consider the instance of France, which issued its first Sovereign Green Bond in 2017. The move catalyzed a global interest, showcasing the potential for green bonds to attract a diverse investor base while financing eco-friendly initiatives. India’s foray into this arena is thus not without precedent but is particularly notable given its burgeoning economy and sustainable development goals.

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Potential Implications

The inclusion of Sovereign Green Bonds under FAR can have sweeping consequences:

  • Market Expansion: The green designation may lure a new cohort of eco-conscious investors, potentially expanding the market base for Indian G-Secs.
  • Sustainable Development Financing: This move aligns with global trends towards environmentally-focused fiscal policies, paving the path for substantial capital inflows for green projects.
  • Rating Boost: The green tag could positively influence India’s sovereign ratings, as it demonstrates a commitment to sustainable practices.

Forward-Looking Insights

The RBI’s decision is a strategic masterstroke in the context of global finance’s green transition. It signals to the world that India is not just an economic powerhouse but also a responsible member of the global village, committed to combating climate change. As we look ahead, we can expect:

  • Innovative Financial Products: The success of Sovereign Green Bonds could lead to the introduction of more nuanced green financial instruments.
  • Policy Synergy: A closer alignment between fiscal and environmental policies, as financial mechanisms become tools for ecological stewardship.
  • Global Benchmarking: India’s move could set a precedent for other emerging economies, positioning it as a thought leader in sustainable finance.


The RBI’s inclusion of Sovereign Green Bonds under FAR is more than a policy update; it is a clarion call for the financial sector to align with the imperatives of sustainable development. This initiative stands as a testament to India’s forward-looking stance, where financial ingenuity is leveraged to meet the environmental challenges of our times. The journey of India’s Sovereign Green Bonds will be a narrative of innovation, financial acumen, and ecological consciousness, setting a benchmark for the rest of the world to follow.

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