India’s Pension Regulator Approves Sovereign Green Bonds Investment

India’s Pension Fund Regulatory and Development Authority (PFRDA) has announced it will allow pension funds to invest in sovereign green bonds. The Indian government intends to issue these bonds in the second half of the current financial year as part of its overall market borrowing programme. This decision to permit investment in sovereign green bonds comes amidst growing global demand for sustainable and impact-driven investments, with pensions and insurance funds increasingly seeking investments that have a positive effect on society. In the previous financial year, the Indian government successfully raised INR 160 billion (US$1.9 billion) through the issuance of its first sovereign green bonds. The funds raised were used to finance public sector projects aimed at reducing carbon emissions. Pension funds have played a crucial role in the development of the green bond market, with Scandinavian pension funds and the World Bank initially collaborating to kick-start this market. There are currently 10 pension fund managers in India responsible for managing funds under the National Pension System. 

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