• Corporate / Business

NABARD Successfully Lists First of Its Social Bonds with A Size of Rs 1040 Crores on BSE

• nationalherald
• September 30, 2023

 by Prashant Kapadia/NHN

Funds raised through these Bonds will be used to provide essential financing to bolster ‘Jal Jeevan Mission in Telangana

Five critical projects under the NIDA for Jal Jeevan Mission have already been sanctioned by NABARD amounting to a total investment of ₹5,416.675 crores.

NABARD will continue to expand its offerings with ‘Sustainability Bonds’ and ‘Green Bonds’ in the near future

29^th September 2023, Mumbai: The National Bank for Agriculture and Rural Development (NABARD) announces the successful listing of its ‘Social Bonds’ on the Bombay Stock Exchange (BSE). The bonds received positive response from the market as the issue was oversubscribed 2.86 times. The funds raised through this offering will be used to refinance the essential financing provided for the drinking water projects under the Jal Jeevan Mission in the state of Telangana. The decision was taken after an extensive consultation with KPMG and other stakeholders.

Mission Bhagiratha under the Jal Jeevan Mission, an ambitious initiative by the Government of Telangana, focuses on delivering safe, sustainable, and treated drinking water to both rural and urban areas across the state. NABARD has already sanctioned five critical projects under the National Infrastructure Development Authority (NIDA) for Mission Bhagiratha, amounting to a total investment of ₹5,416.675 crores.

Emphasizing on the significance of this listing, Chairman of NABARD Shri Shaji K V said, “NABARD, the largest development financial institution, predates the concept of ESG before it has been in vogue. He emphasised that this issue of social bond is one small step for NABARD but a giant leap for the Indian rural economy. For the growth of the economy, we must now look to rural areas through credit, capacity building and making the rural economy ready for the private investments to flow in. NABARD continues to be the leader in the bond market and the organisation is now focussing on documenting the impact and in turn ensuring transparency and is on the right path to list the Green bonds by the end of FY23-24. The Chairman also suggested that the government could consider bringing in incentives for the investors of Social and Green bonds to boost the subscriber interest in such bonds. I urge the market participants to ensure that the investments are also directed to the rural markets to ensure access to innovative capital market solutions to the rural masses for which NABARD shall be taking the leadership role and in turn ensure democratisation of access to the rural population.

As India’s apex developmental financial institution, NABARD is leading the way in sustainable finance. NABARD recently announced a Sustainable Bond Framework, which seeks to finance and refinance new or existing eligible green and social projects. Following the listing of social bonds, NABARD plans to expand its offerings with ‘Sustainability Bonds’ and ‘Green Bonds’ in the near future. Social bonds have gained prominence worldwide as a powerful tool to fund projects that generate both financial returns and social benefits. However, their prominence in India is still in a nascent stage.

While highlighting NABARD’s mission to create a positive impact on communities through sustainable finance, Shri Alok C. Jena, Chief General Manager, Financial Department, NABARD said, “Listing of this social bond would rededicate ourselves to promote projects that not only generate financial returns and also create lasting social values. It does reflect our commitment in addressing critical challenges in rural India. With the funds raised through this initiative, we intend to further support projects that contribute to environmental conservation, energy efficiency, and the mitigation of climate change effects. Our bond investors are not merely stakeholders they are partners in our mission to create positive social impact. Our objective would be to sensitize our investors, which would get translated into yield advantages at least 10bps vis-à-vis our normal bonds. I think that comes from investor sensibility towards social bond, green bond or our bond which has specific purpose especially in our domestic market.”

The funding status of these projects is as follows:

Sr. No.	State	Sanction Amount	Disbursed Amount	O/S as on 10.07.2023
1	Telangana	1976.80	1526.56	990.85
2	Telangana	1168.00	1051.86	723.15
3	Telangana	794.40	610	406.67
4	Telangana	853.675	737.51	508.5
5	Telangana	623.80	533.31	477.76
Total		5416.675	4459.240	3106.930

The successful listing of NABARD’s Social Bonds marks a significant step toward mobilizing funds for Jal Jeevan Mission while promoting broader social objectives. This achievement is expected to:

• Encourage investments in sustainable projects.

• Attract socially responsible investors.

• Foster the growth of the green and social bond market in India.

• Showcase NABARD’s leadership in promoting sustainable finance.

These Social Bonds exemplify NABARD’s commitment to addressing social issues and achieving positive outcomes for marginalized populations and communities.

About NABARD: The National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution in India. Established on 12 July 1982, with headquarters in Mumbai, NABARD operates with a mission to promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institutional development, and other innovative initiatives. NABARD plays a crucial role in fostering rural development, empowering farmers, and catalyzing the growth of the rural economy.