Govt To Issue Rs 20,000 Crore SGBs In 4 Tranches This Fiscal

The Central government has announced plans to collect Rs 20,000 crore, 4 issues of Rs 5,000 crore each, through the issuance of ‘Sovereign Green Bonds’ (SGBs) in the second half of the financial year 2024-25 (October-March).

The government aims to complete its borrowing for the latter half of FY25 through a series of 21 weekly auctions. The green bonds will be issued in four tranches, each valued at Rs 5,000 crore. The first tranche will consist of a 10-year Sovereign Green Bond, scheduled for issuance between November 25 and November 29.

Following this, a 30-year bond worth Rs 5,000 crore will be issued from December 9 to December 13. The third tranche, again a 10-year bond, is set for January 27 to January 31, while the final tranche will consist of a 30-year green bond, to be issued between February 17 and February 21.

Talking to Bizz Buzz, MV Hariharan, ex-head, SBI said, “The success of SGB bonds of the tenors mentioned are contingent upon effective implementation of the initiatives. While the intentions are definitely aligned with fast tracking sustainability and purposeful environmental management, politics and the funds flowing into the projects with time-bound execution and delivery.”

So while the comfort of the sovereign backing is good, the focus must be on mission mode forward movement with measured supervision and guidance which requires political agnosticism. Furthermore the enablers can be proactive and inclusive communication and keeping all stakeholders in the loop, he said.

Sovereign Green Bonds are a form of government debt designed to finance projects that support India’s transition to a low-carbon economy. The proceeds will specifically fund environmentally sustainable initiatives, including public sector projects that adhere to eco-friendly practices.

Additionally, the government has retained the right to exercise the green shoe option, which allows it to accept additional subscriptions of up to Rs 2,000 crore for each security mentioned in the auction notifications. This provision provides flexibility to accommodate increased investor demand.

Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors, said, “The government will also be borrowing weekly Rs 19,000 crore through Treasury Bills during the third quarter for 13 weeks.”

For meeting short term funding needs the RBI has also allowed a limit of Rs 50,000 crore under the ways and mean advances in second half of the year to address temporary mismatches. The government finalized the second half borrowing programme with RBI to the extent of Rs 6.61 lakh crore (47 per cent) with total borrowings for the full year Being Rs 14.01 lakh crore, he said.

The Ministry of Finance also announced that the central government’s weekly borrowing through Treasury Bills during the third quarter of FY25 is expected to reach Rs 19,000 crore over 13 weeks. To address any temporary discrepancies in government accounts, RBI has set the Ways and Means Advances (WMA) limit for the second half of FY25 at Rs 50,000 crore, ensuring adequate liquidity for short-term funding needs. In consultation with the RBI, the borrowing program for the second half of 2024-25 has been finalised. For the entire fiscal year 2024-25, the government has budgeted a gross market borrowing of Rs 14.01 lakh crore, with Rs 6.61 lakh crore, or 47.2 per cent, planned to be raised in the second half through the issuance of dated securities and bonds.