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The Daily Brief
Are RBI’s Green Bonds a flop?
Dec 3, 2024
India’s green bonds are struggling due to poor auction performances and low investor interest. Factors such as low yields and limited liquidity are contributing to this dilemma, highlighting the need for fresh strategies to make them more attractive. The podcast also discusses new RBI guidelines affecting co-branded credit cards, revealing how they impact partners and the wider economic landscape, including Bajaj Finance's exit from this market. Trends in luxury markets and battery manufacturing add further depth to the economic conversation.
15:29
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Quick takeaways
- The recent auction of India's green bonds revealed significant challenges, as only a small portion of bonds issued attracted buyers due to low returns and poor liquidity.
- Bajaj Finance's exit from co-branded credit card partnerships reflects the impact of stricter RBI regulations, prompting a reevaluation of such financial collaborations.
Deep dives
Challenges in India's Green Bond Market
The recent auction of sovereign green bonds in India showcased significant challenges within the green bond market. Only a small fraction of the 5,000 crore bonds issued found buyers, raising concerns about the underlying appeal of these investments. Factors influencing this tepid demand include lower returns, poor liquidity, and the absence of incentives that could attract a broader base of investors. As institutional players dominate the market, retail participation remains minimal, making it difficult for green bonds to compete effectively against traditional government securities.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode