Green Bonds-Trend and Challenges in India

Abstract

Green bonds in Indian market play a vital role to shape the debt market and to position the environment sustainability by generating funds specifically for green projects. The objectives of this paper is to understand the green bond as an environmental sustainable tool and further to draw the trend of green bond and challenges so far in context to the Indian financial market. The emergence of green/climate bonds takes place from Paris Agreement in 2015 where 188 countries sign up to limit the rising temperature by less than two degree Celsius and India is one of the countries to sign the agreement. The paper is based on a descriptive study using secondary data source from several government reports, other published reports and banking sector reports. The paper concludes that the green bond successfully fulfils criteria to become a sustainable tool which can be seen as an investment opportunity alternative to equity funds, other corporate bonds. The green bond trend is upward sloping showing great potential to grow and develops the sustainable goals with success achievement. Certain challenges as hedge currency cost, lack of awareness, low sovereign rating makes green bonds a less attractive among investor which can be fairly reduced by proper governmental strategic actions.